ABSTRACT
Monetary arrangements play a key role in regulating the political economy; so do financial arrangements. This chapter focuses on the part played by international monetary and financial arrangements in restricting or facilitating political authorities’ discretion over domestic economic policy. It also focuses on Bretton Woods agreement, or more formally the Articles of Agreement of the International Monetary Fund — the legal framework of the contemporary international monetary system — as negotiated towards the end of the Second World War. The chapter examines the failure of the Bretton Woods agreement to provide a definitive resolution to the inherent conflict between the aims of exchange-rate stabilisation, national monetary policy autonomy, and capital account liberalisation. The key difference between the convergent elements of the Keynes and White Plans and the agreement actually endorsed at Bretton Woods concerned capital controls. Certainly the final Bretton Woods agreement retained elements of the anti-liberal consensus between White and Keynes on this subject.
