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The Rise and Fall of International Currencies

A new international monetary system that ends the global dominance of the US dollar is both necessary and desirable. But to anticipate what might come next, one first must understand the political and economic dynamics that give rise to international currencies in the first place.

LONDON – The Bretton Woods international monetary system that came into being after World War II was based on a set of clear rules. The US dollar stood at the system’s center, and other countries pegged their currencies to it. The US promised that central banks’ dollar holdings would be convertible into gold at a fixed price, and the International Monetary Fund oversaw the system to make sure that everyone followed the rules.