Why the landmark Bretton Woods deal is as relevant today as in 1944 | Larry Elliott

Why the landmark Bretton Woods deal is as relevant today as in 1944 | Larry Elliott

War was still raging in Europe and Asia when delegates from 44 countries met at Bretton Woods in New Hampshire in July 1944. Three weeks of negotiations produced two new global institutions – the International Monetary Fund and the World Bank – and a different economic mindset.

Out went the beggar-my-neighbour approach that had marked the 1930s. In came co-operation to ensure the rebuilding of economies devastated by war and the goal of full employment.

Bretton Woods did not produce the perfect outcome. The UK’s delegate – John Maynard Keynes – argued that if a country ran into balance of payments problems its creditors should be obliged to help out by boosting their imports. The US – the world’s biggest creditor nation at the time – insisted that the burden of adjustment should fall on debtor nations, something that has influenced the way the IMF works ever since.