Original intention of Bretton Woods worth cherishing

Editor's note: This year marks the 75th anniversary of the Bretton Woods system. Zhao Ke, a researcher in international strategy at the National Academy of Governance, in an article in Beijing News on Thursday, comments:

After two world wars, the Western countries reached a consensus that the stability of currencies is of crucial importance to the stability of the global economy, and the stability of currencies entails an adjustable exchange rate system.

It was on this consensus that the Bretton Woods system was built by 44 countries, including China, to tie world currencies to the dollar, which, in turn, as the countries agreed, should be convertible into gold at $35 per ounce.

The system fixes the fluctuations of the other currencies' exchange rate to the dollar within a certain range, and the International Monetary Fund was established to provide short-term financing for the countries that are experiencing balance of payment difficulties.

To some extent, the 30 years of development of Western countries after World War II can be attributed partially to the prosperity of international trade brought about by stable exchange rates.

On Aug 15, 1971, US President Richard Nixon suddenly announced the "temporary" suspension of the dollar's convertibility into gold. A subsequent attempt to revive the fixed exchange rates failed, and by March 1973 the major currencies began to float against each other.

Some people think the system is still there, because since the 1970s the dollar has always been the international currency.

With protectionism and unilateralism on the rise, the 75th anniversary of the Bretton Woods system provides a good opportunity for the world to reflect on the original intention of international cooperation and multilateralism that led to its creation.