Barry Eichengreen reviews the history of the international financial system, from the pre-1913 gold standard managed by three countries, to the Bretton Woods system that failed to impose incentives on surplus countries to reduce imbalances, to recent episodes of the creation of SDR’s as a reserve currency. He doubts that SDR’s could ever form the basis of a new system. He notes the current impasse between China and the U.S. in even agreeing about what problems a new system should address, and predicts that three strong reserve currencies (dollar, yuan, and Euro) will emerge after the current crisis fades.
Barry Eichengreen, Professor of Economics and Political Science at the University of California Berkeley, speaking in the panel "What Can We learn from the Past in Designing the Future?" at the Bretton Woods Conference on April 9, 2011.