system

The regulating controls of the international monetary system (IMS) are the most complex of capitalist economies, and are also the most vulnerable to change. Money plays a crucial role in the economic system. It can be a source of political antagonism or a means of pacification, depending on whether monetary regulations are resisted and rejected as being unjust or inefficient, or whether they are generally accepted. The vulnerability of the international monetary system stems from the absence of an indisputable conductor in the concert of nations, since there is no supranational sovereign authority to guarantee money. After the end of the implicit monetary constitution of the gold standard that lasted for some thirty years, money was nationalised and national currencies were thus subordinated to the objectives of political authorities. International monetary control became problematic. Despite the broadmindedness of its promoters, the Bretton Woods accord that lasted for a quarter of a century eventually became a hegemonic system, legitimised by the priority of collective security against the Cold War threat. Its stability experienced devastating tensions in the late 1960s when the US government exploited its dominant position in an attempt to avoid difficult domestic decisions. Since then, disturbances in monetary relations have been caused by international upheavals (Chapter 7). These disturbances have not, however, degenerated into the conflicts of the 1930s. Financial interdependence has continued to grow with surprising energy. In the rapidly transforming world economy, we are participating in a search if not for a new monetary constitution, then at least for new multilateral co-responsibilities.