While the Bretton Woods system of fixed exchange rates ended almost 40 years ago, remarkably, policy makers continue to be fascinated by the policy strategy that underpinned its arrangements. This paper considers the relevance of the Bretton Woods system for the prospects of reform of the international monetary system and in the context of the ongoing euro area financial crisis, exploring the challenges that must be met in attempting to reform the present international monetary system and euro area policies.

After considering what resonates, and what does not, from the Bretton Woods regime of fixed exchange rates, CIGI Senior Fellow Pierre Siklos examines some of the key lessons from that era, concluding that policy makers at Bretton Woods promised too much in terms of the stability and durability of the policy regime, and did not give sufficient thought to how the arrangement would actually function. They failed, Siklos argues, to instill the logic of collective action among their members, and paid virtually no attention to governance issues.

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CIGI Papers present in-depth analysis and discussion on governance-related subjects. They include policy papers that present CIGI experts' positions or contributions to policy debates, and background papers that contain research findings, insights and data that contribute to the development of policy positions.
  • Pierre Siklos is a CIGI senior fellow. His research interests include applied time series analysis and monetary policy, with a focus on inflation and financial markets.