The Bretton Woods Agreement collapsed in 1973 when President Richard Nixon unilaterally decided to abandon the gold standard, with other countries, starting with Switzerland and other European nations, subsequently following suit.
The termination of the Bretton Woods Agreement, however, did not extinguish hopes of reinstating a sense of order and low volatility in the tumultuous currency markets. Paul Volcker, who was serving as the Chairman of the Fed at the time of the agreement’s demise, was one individual who notably advocated for a new Bretton Woods Agreement in 2014.
The original 1944 agreement had established the U.S. dollar as the global currency by linking its value to gold, resulting in three decades of unparalleled stability in global currency markets and exchange rates.
Volcker personally witnessed the repercussions of the agreement’s abandonment, noting that the ensuing years were marked by recurring currency crises, including those in Mexico, Latin America, Asia, and the 2008 global financial crisis and Great Recession—amounting to four significant currency crises in just 35 years.
Volcker persuasively argued that a new Bretton Woods Agreement could pave the way for an internationally coordinated financial and monetary system, providing much-needed stability for the troubled global economy. Such a system could establish rules to guide and promote better world monetary policy and even potentially introduce a new global reserve currency to replace the U.S. dollar. This renewed system would facilitate a balanced equilibrium in nations’ balance of payments, enabling countries worldwide to maintain adequate foreign exchange reserves.
Volcker presented these suggestions and observations while chairing the Bretton Woods Committee meeting in 2014. As the Chair Emeritus, he leads a group of global leaders committed to rebuilding cooperation among international financial institutions, including the International Monetary Fund, the World Bank, major central banks, national treasuries, and influential private banks.
The Bretton Woods Committee was established in 1983, around the tenth anniversary of the Bretton Woods Agreement’s failure, at the behest of two former U.S. Treasury officials, Democrat Secretary Henry Fowler and Republican Deputy Secretary Charls Walker. Both men recognized the pressing need for a concerted effort to ensure that leading global citizens emphasized the critical importance of International Financial Institutions (IFIs). The annual meetings have continued uninterrupted since 1983, with the 2016 meeting marking the 33rd year.
The Bretton Woods Committee comprises approximately 200 leaders from finance, business, academia, and non-profit sectors, including former presidents, industry CEOs, lawmakers, and cabinet-level officials. They share a common belief in the essential nature of international economic cooperation, best achieved through strong and efficient IFIs. Through their work on the Bretton Woods Committee, they lead global efforts to promote economic growth, foster financial stability, and reduce poverty.
The committee organizes regular conferences, educational opportunities, and seminars, many of which are designed to engage a broad segment of the public. Other events are more exclusive, providing committee members with opportunities to offer support, insights, and constructive criticisms to the management teams of IFIs.
The Bretton Woods Committee has a history of successfully collaborating with all U.S. administrations to remind elected leaders that enduring national security and global economic prosperity are inextricably linked and enhanced by continuous progress on multinational issues.
