page_title: International monetary systems
section_title: Calls for a "New Bretton Woods"
hierarchical_section_title: International monetary systems / Calls for a "New Bretton Woods"
caption_attribution_description: English: G20 Leaders Summit on Financial Markets and the World Economy in Washington, D.C. on 15 November 2008. Español: Cumbre de Washington, 15 de noviembre de 2008.They are (top row, left to right): Mario Draghi (Financial Stability Forum), Ban Ki-moon (United Nations), Silvio Berlusconi (Italy), José Manuel Barroso (European Commission), Gordon Brown (U.K.), Angela Merkel (Germany), José Luis Rodríguez Zapatero (Spain) , Recep Tayyip Erdoğan (Turkey), Manmohan Singh (India), Stephen Harper (Canada), Kevin Rudd (Australia), Taro Aso (Japan), Robert Zoellick (World Bank), Dominique Strauss-Kahn (IMF); and (bottom row, left to right) Jan Kees de Jager (Netherlands), Dmitry Medvedev (Russia), Cristina Fernández de Kirchner (Argentina), Felipe Calderón (Mexico), Susilo Bambang Yudhoyono (Indonesia), Luiz Lula da Silva (Brazil), George W. Bush (US), Hu Jintao (China), King Abdullah (Saudi Arabia), Nicolas Sarkozy (France), Lee Myung-bak (South Korea), and Kgalema Motlanthe (South Africa)
context_page_description: An international monetary system is a set of internationally agreed rules, conventions and supporting institutions that facilitate international trade, cross border investment and generally the reallocation of capital between nation states. It should provide means of payment acceptable to buyers and sellers of different nationalities, including deferred payment. To operate successfully, it needs to inspire confidence, to provide sufficient liquidity for fluctuating levels of trade, and to provide means by which global imbalances can be corrected. The system can grow organically as the collective result of numerous individual agreements between international economic factors spread over several decades. Alternatively, it can arise from a single architectural vision, as happened at Bretton Woods in 1944.
context_section_description: Leading financial journalist Martin Wolf has reported that all financial crises since 1971 have been preceded by large capital inflows into affected regions. While ever since the seventies there have been numerous calls from the global justice movement for a revamped international system to tackle the problem of unfettered capital flows, it was not until late 2008 that this idea began to receive substantial support from leading politicians. On September 26, 2008, French President Nicolas Sarkozy, then also the President of the European Union, said, "We must rethink the financial system from scratch, as at Bretton Woods."
  On October 13, 2008, British Prime Minister Gordon Brown 
  
  said world leaders must meet to agree to a new economic system: 
  We must have a new Bretton Woods, building a new international financial architecture for the years ahead.
  However, Brown's approach was quite different from the original Bretton Woods system, emphasising the continuation of globalization and free trade as opposed to a return to fixed exchange rates.
  There were tensions between Brown and Sarkozy, who argued that the "Anglo-Saxon" model of unrestrained markets had failed.
  However European leaders were united in calling for a "Bretton Woods II" summit to redesign the world's financial architecture.
  President Bush was agreeable to the calls, and the resulting meeting was the 2008 G-20 Washington summit.  International agreement was achieved for the common adoption of Keynesian fiscal stimulus, an area where the US and China were to emerge as the world's leading actors.
  Yet there was no substantial progress towards reforming the international financial system, and nor was there at the 2009 meeting of the World Economic Forum at Davos 
  Despite this lack of results leaders continued to campaign for Bretton Woods II. Italian Economics Minister Giulio Tremonti said that Italy would use its 2009 G7 chairmanship to push for a "New Bretton Woods". He had been critical of the U.S.'s response to the global financial crisis of 2008, and had suggested that the dollar may be superseded as the base currency of the Bretton Woods system.
  Choike, a portal organisation representing Southern Hemisphere NGOs, called for the establishment of "international permanent and binding mechanisms of control over capital flows" and as of March 2009 had achieved over 550 signatories from civil society organisations.
  March 2009 saw Gordon Brown continuing to advocate for reform and the granting of extended powers to international financial institutions like the IMF at the April G20 summit in London,
   and was said to have president Obama's support
  .
  Also during March 2009, in a speech entitled Reform the International Monetary System, Zhou Xiaochuan, the governor of the People's Bank of China came out in favour of Keynes's idea of a centrally managed global reserve currency. Dr Zhou argued that it was unfortunate that part of the reason for the Bretton Woods system breaking down was the failure to adopt Keynes's bancor. Dr Zhou said that national currencies were unsuitable for use as global reserve currencies as a result of the Triffin dilemma – the difficulty faced by reserve currency issuers in trying to simultaneously achieve their domestic monetary policy goals and meet other countries' demand for reserve currency. Dr Zhou proposed a gradual move towards increased use of IMF special drawing rights (SDRs) as a centrally managed global reserve currency  
  His proposal attracted much international attention. In a November 2009 article published in Foreign Affairs magazine, economist C. Fred Bergsten argued that Dr Zhou's suggestion or a similar change to the international monetary system would be in  the United States' best interests as well as the rest of the world's.
  Leaders meeting in April at the 2009 G-20 London summit agreed to allow $250 Billion of SDRs to be created by the IMF, to be distributed to all IMF members according to each countries voting rights.  In the aftermath of the  summit, Gordon Brown declared "the Washington Consensus is over".  However, in 
caption: G-20 leaders at Summit on Financial Markets and the World Economy.
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