Introduction

Bretton Woods Conference or as formally referred to as the United Nations Monetary and Financial Conference took place at Bretton Woods in New Hampshire in 1944. This conference aimed to make financial arrangements for the aftermath of World War 11 given the already expected defeat of Japan and Germany.  Experts representing 44 governments inclusive of the Soviet Union attended the conference to engage in the development of projects for International Bank for Reconstruction and Development (IBRD). This was to ensure that long term capital was made available for the states that were in urgent need of foreign aid.

The notability in the macroeconomic performance is one reason as to why we need a new Bretton Woods Conference. After the conference, the inflation rate was averagely lower for almost all the industrialized nation only for Japan. Inflation variability, as well as persistence, went down under the subsequent float leading to low and even stable nominal interest rates. Due to this fact, there was a rise in the real per capita income that was furthermore variable as compared to the subsequent float. In relation to this, the current exchange market faces volatility and misalignments that can only be altered only if there will be another conference that will venture deep in these bands.  This is so because there will be a system that will be created that will coordinate policies that will control the excessive exchange rates that continue to affect the world economy. By so doing, the system will yield rates that are flexible and favorable. For example, through the new conference, the World Bank and the IMF would be able to monitor as well as manage all the world currencies responsibly; as a result, the fluctuation rate will be within narrow bounds that are within the real equilibrium rates of exchange.

A new Bretton Woods Conference will lead to the degree of stable exchange rates that are favorable. Bretton Woods Conference provided effective nominal results that led to the convertibility of money, and as a result, developed the stable nominal. In this case, given the current situation in the world economy, another conference will make it easy to link the real output stability to the nominal performance that is effective. It is for a fact that output stability in the current world is experiencing a windfall effect. The exchange rate of stability regime is not accountable for the investment levels as well as the trade flows. This are channels that highly contribute to economic growth. In this case, through the new Bretton Woods Conference, there will be a trade liberalization that will lead to prosperity in various institutions as in the case of GATT that resulted from the frameworks of Bretton Woods. The exchange rates will be controlled as well as the discriminatory tariffs that will lead to the ratification of measures that have negatively impacted trade. For example, through the Bretton Woods Conference, political idealism, as well as financial caution, were represented, hence there was a reconstruction of European economies that created a long term development.

Through a new Bretton Woods Conference, there will exist unprecedented expansion of trade within and outside the borders, hence there will be adequate opportunities for investment. A new Bretton Woods Conference, in this case, can go beyond gold to a monetary regime that will presumably favor domestic currencies. For instance, as in the current world, international businesses will be effective if the dollar will be embraced as a dominant medium of exchange in global markets. This implies that the invoice currency will be considered a primary commodity in trade and all the foreign transactions that will create massive opportunities of investments. The new conference will bring to an end the market fluctuations that tend to arise from the foreign exchange rates as well as control the substitute management of the movements of the central bank. For some point, the new Bretton Woods will lead to a return of the gold standard, fixed rates of exchange as well as the domestic currencies that are possible to be transformed into gold. For instance, for so many years, the post-Bretton Woods has seen the government setting aside the simple and flexible rules of maintaining the fixed prices for commodities such as gold. This is an action that has not been embraced yet it could have benefited the world market at large.

A new Bretton Woods Conference will aggregate national income through international trade. For instance, in the US where international business played a minor role in developing the state’s income, it implied that the domestic economy could not prevent the payment balance. This is evident from the 1946 Act which prevailed on the fact that the maintenance of gold prices was never an objective of creating employment. However, given the current market situation, it is visible that many governments have destroyed the gold standards that are viable for development.  In the pre-World War 1, real gold standards were feasible in which most of the governments such as the US and Britain spent approximately 10% of their income. This is relevant today for any country that wants to achieve its economic targets.  Through the new Bretton Woods Conference, states can adopt the gold standard that will lead to a balance of payments. By so doing, many of these governments will not be constrained like how the private sector is, where it has to lay off most of its workers as well as cutting service prices. Instead, there will exist inflation-free economy suitable for advancing industrialization in many countries all around the world.

Conclusion

Bretton Woods Conference yielded many successes like the reconstruction of Europe through the World Bank and the IMF.  This is a factor that makes us consider the need for another Bretton Woods which will even make the world economies far better. For instance, if the IMF was not there, there could have existed the balance trade that could have considerably slowed things. In this case, having a new Bretton Woods Conference will positively cause institutions like the World Bank to keep an eye on the credit balances, hence promoting investment opportunities, aggregate international trade and create investments opportunities for most nations.

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