The International Monetary System

Abstract

The international monetary system, certainly as defined by the ‘rules of the game’, has gone through many incarnations since the start of the century.¹ In broad terms, the system has moved from the fixed exchange rates of the gold standard (ending in 1914), through a period when there was no maintained universal system, but which saw both a brief return to the gold standard and a period of floating exchange rates (1914–45), into the Bretton Woods pegged exchange-rate system (1945–1973), and finally into the current ‘managed floating’ system. Over the same period the dominant currency has changed, from the pound sterling at the start of the century to the US dollar in the Bretton Woods system, culminating in the present dollar/yen/Deutschmark troika.