Do We Need an International Lender of Last Resort
By Jeffrey Sachs
The world monetary system has changed dramatically from the arrangements envisaged at Bretton Woods in 1944, or indeed from any previous international economic experience. The Bretton Woods system envisaged a world of pegged but adjustable exchange rates, with countries linked together by mainly by trade but not capital movements. The global gold standard of the pre-World War I era, which covered a remarkable 89 percent of the world's population in 1908, was a system of high international capital mobility but almost no unbacked fiat money. The world of 1995 is a world of high capital mobility and the nearly universal use of unbacked fiat money.