ABSTRACT
The international monetary system is at the core of the global economy. All other aspects of economic relations between nations derive from prevailing institutional arrangements concerning world money and its circulation, Keynes, during a House of Lords debate in May 1944 on Bretton Woods, put this point succinctly:
To begin with, there is a logical reason for dealing with the monetary proposals first. It is extraordinarily difficult to frame any proposals about tariffs if countries are free to alter the value of their currencies without agreement and at short notice. ... In the same way plans for diminishing the fluctuation of international prices have no domestic meaning to the countries concerned until we have some firm ground in the value of money. Therefore, whilst the other schemes are not essential as prior proposals to the monetary scheme, it may well be argued, I think, that a monetary scheme gives a firm foundation on which the others can be built. It is very difficult while you have monetary chaos to have order of any kind in other directions. (Keynes, 1980b, p.5)
