U.S. Monetary Hegemony after the Collapse of the Bretton Woods System

Jiarui Wu

doi:10.54691/bcpbm.v17i.340

Abstract

The Bretton Woods system (1944) founded inextricable monetary connections between the U.S. and many countries around the world, including Canada, Australia, and most Western European countries. It enabled the U.S. to build up its monetary hegemony in the world, possessing great influence on the global currency market. Since there were various limitations that existed in the inherent structure of the system and the U.S.’s inabilities to master the global market, the Bretton Woods System collapsed in less than 30 years. Nevertheless, though the Bretton Woods System ended in 1971, the U.S. did not lose its dollar hegemony and still owned considerable advantages in its monetary supremacy. This paper will provide the context of the Bretton Woods System of monetary management. Significantly, I will explore the reasons that gave rise to the U.S.’s continuous monetary hegemony, the pros and cons of dollar hegemony, and its expected challenges.

Highlights

In 1944, the United States and other global powers held negotiations on building financial and commercial relations, leading to the formation of the Bretton Wood System
The U.S stimulated the development of its monetary hegemony in the international currency market through the establishment of the system, but the immanent limitations of the system and incapacity of the U.S to control the global market led to its downfall
This paper provides a brief history of the Bretton Wood System and the factors that contributed to its downfall

Summary

Introduction

In 1944, the United States and other global powers held negotiations on building financial and commercial relations, leading to the formation of the Bretton Wood System. Under this system, the U.S dollar was based on gold, and other currencies were pegged on the dollar's value. The U.S stimulated the development of its monetary hegemony in the international currency market through the establishment of the system, but the immanent limitations of the system and incapacity of the U.S to control the global market led to its downfall. The paper will explore reasons why the U.S monetary hegemony survived despite the system's collapse. The paper will delve into the strengths and shortcomings of the dollar hegemony and the expected challenges

The Bretton Woods System

Reasons Why the Dollar Hegemony Survived and Still Possessed Advantages

Pros and Cons and Possible Challenges of the Dollar Hegemony