ABSTRACT
Reconstruction of the international monetary system began even before the end of the Second World War. The transformation of the post-war dollar shortage into a dollar surplus was a gradual and almost imperceptible process which, in the early 1950s, gave little cause for concern. The world was dependent on US dollars as a source of international liquidity since the growth of gold reserves was insufficient to finance international trade and development. The weakness of the dollar was paralleled by the weakness of sterling, which became the focus of a succession of speculative attacks in the mid-1960s. The oil crisis affected all petroleum-importing countries and they were unable to collectively depreciate their currencies since there were few, if any major currencies to depreciate against. The international banking system was instrumental in accommodating oil-induced balance of payments disequilibria and in containing international instability.
