Introduction: The Reconstruction of International Monetary Arrangements

Abstract

The agenda at conferences on policy issues in international finance tend to reflect the concern with the adequacy of existing monetary arrangements. In July 1972, at the conclusion of the first Wingspread Conference on International Monetary Problems, one participant noted that the Bretton Woods system of pegged exchange rates was breaking down and was beyond repair. Several other participants agreed; one suggested that the only alternative was a system of floating exchange rates. Although the Bretton Woods system of pegged exchange rates had been patched in the context of the Smithsonian Agreement at the end of 1971 and the US dollar had been devalued by more than 10 per cent relative to the currencies of the other major industrial countries, the US balance of payments deficit remained extremely large. The British authorities had ceased supporting the pound at its Smithsonian parity several weeks before the Conference.