Bretton Woods 2 system and US balance of payment deficit

Abstract

The author explores the evolution, functioning, similarities and differences between the original Bretton Woods international monetary system that operated from 1945 to 1973 and the present modified institution, which is symbolically called Bretton Woods 2 System. The existing international financial architecture keeps on being based on the hegemony of the US dollar, as a dominant reserve currency. However, in spite of the fact that in most cases the present international monetary system implies the regime of flexible foreign exchanges rates, a characteristic of this system is that many countries in different degrees refuse to accept the appreciation of their national currencies to the US dollar. At the same time, the domination of the USA, the most indebted country in the world, is becoming a very serious threat to its sustainability. However, as the author concludes, the creators of the international monetary system, being aware how serious could be the consequences of its cessation, endeavor to extend its operation accepting less expensive consequences of keeping it alive.