TITLE:
Factors That Have Led to the Collapse of the Bretton Woods System
AUTHORS:
Yueru Jin, Duanyi Liu, Yuhan Li
KEYWORDS:
The Bretton Woods System, Structuralists’ View, Operationalists’ View, Triffin’s Dilemma, Pegging System, Game Theory, Fundamental Disequilibrium
JOURNAL NAME:
American Journal of Industrial and Business Management,
Vol.8 No.10,
October
23,
2018
ABSTRACT: The Bretton Woods system
was abandoned by the U.S. government in 1971. In order to learn to avoid the
structural flaws that led to the collapse and ensure a more stable economic
condition in the future, this article aims to research the cause of the
collapse. It elaborates on the two main causes of the Bretton Woods system:
structural ones, such as the incompatible role of the USD and the conflicting
sovereign goals, and the operational ones, such as the reluctance of other countries
to follow the exchange rate rules. It then displays viewpoints from these two
causes, and analyses them, that is, strengthens or undermines them, with facts
and reasoning. Finally, it reaches the conclusion that the Bretton Woods system
broke down in 1971 due to structural factors instead of operational ones and
gives some brief lessons from the failure.