RTFA: http://www.rtfa.net/series/organizing-the-worlds-d…

Introducing “Bretton Woods II: Organizing the World’s Definition of Value.” This is a new series from RTFA that collects items relevant to unpacking the events that are shaping the financial landscape. Briefly, Bretton Woods I was a post-WWII meeting to create stability in global currency exchange. In 2008, in the wake of another wave of global financial upheaval, these discussions have been reopened.

You can find the list of series in the sidebar.

RTFA: http://www.eurodad.org/whatsnew/articles.aspx?id=3…

German Chancellor Angela Merkel and French President Nicolas Sarkozy said “Bretton Woods II” should bring about “genuine, all-encompassing reform of the international financial system”. The Council of the European Union sees the meeting as “tak[ing] early decisions on transparency, global standards of regulation, cross-border supervision and crisis management, to avoid conflicts of interest and to create an early warning system, so as to engender confidence among savers and investors in every country.” In announcing the meeting, the spokesperson for US President George Bush said that “leaders will review progress being made to address the current financial crisis, advance a common understanding of its causes, and, in order to avoid a repetition, agree on a common set of principles for reform of the regulatory and institutional regimes for the world’s financial sector”. UK Prime Minister Gordon Brown, in a mid-October speech, set out several principles. These include transparency (internationally agreed accounting standards, credit insurance market standards), integrity (credit agencies, executive pay), responsibility (board member competency and expertise), sound banking practice (protecting against speculative bubbles).

For the new international architecture Brown and others are discussing an effective global early warning system for risk prevention, globally accepted standards to supervise cross-border capital flows and the activities of global firms, plus stronger institutions for cooperative action in crises. For CSOs it will be important that equity as well as stability is discussed at the conference and that fairer rules are developed for aid, debt, trade, investment, taxation and capital flight. The governance of the international financial institutions must be radically changed, fair debt workout mechanisms introduced, and much more.

Now that the election is behind us, on to new tasks… A very prominent, timely question: what will be the composition of the next global reserve currency? The US Dollar has enjoyed this position for some time, but the Dollar is in some trouble. What is the solution? That will be decided on November 15, 2008.

I’ve been calling this Bretton Woods III according to the following progression:

BW I was the agreement of world gold exchange
BW II was the agreement of the dollar reserve currency
BW III will be the establishment of a new model for global currency exchange

It seems this will be called Bretton Woods II for some reason, but no matter. The end result is a third round of negotiations for global reserve currency policy. What will this look like?

RTFA: http://www.fsforum.org/about/history.htm

On October 3, 1998, the Finance Ministers and Central Bank Governors of the G7 countries commissioned Dr Hans Tietmeyer, President of the Deutsche Bundesbank, to recommend new structures for enhancing co-operation among the various national and international supervisory bodies and international financial institutions so as to promote stability in the international financial system.

G7 Ministers and Governors reinforced their commitment to reforms to the international financial system and financial stability in a declaration issued on 30 October 1998. He recommended the creation of a Financial Stability Forum.

Dr Tietmeyer presented his report to G7 Ministers and Governors at the meeting in Bonn on 20 February 1999 and G7 Ministers and Central Bank Governors endorsed the creation of a Financial Stability Forum (FSF) bringing together:

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national authorities responsible for financial stability in significant international financial centres, namely treasuries, central banks, and supervisory agencies;

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sector-specific international groupings of regulators and supervisors engaged in developing standards and codes of good practice;international financial institutions charged with surveillance of domestic and international financial systems and monitoring and fostering implementation of standard;

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committees of central bank experts concerned with market infrastructure and functioning.

The FSF was first convened on 14 April 1999 in Washington. Mr Andrew Crockett, General Manager of the Bank for International Settlements, was appointed Chairman of the FSF in a personal capacity.

RTFA is going to present a brief series of posts concerning the G20 financial meeting that some are calling “Bretton Woods II”. We start with a little bit of history about the Financial Stability Forum, who have a stake in the meeting: they stand to gain a more significant leadership role in global markets.

RTFA: http://finance.google.com/finance?cid=983582

…not to fan the flames or anything, but the DOW has returned to September 11, 2001 levels. Really, that’s not such a bad thing, given how overvalued everything became during the deregulation of the last 8 years. …but in 52 weeks, the volume of the DOW has been cut in half, and that level of shock is going to … reverberate.

Here’s the upside: there is still actual value in the US economy. Yes, we’re the collective victims of massive pump-and-dump fraud, but it’s hardy like “we” aren’t producing anything. In other words, the market needs to bottom out at some value above zero. That will happen when people start to believe that things are undervalued, so it will make sense to invest again. This very process can be hindered if there is no effective monetary system that functions as a medium for the transmission of value, and that just might happen if the dollar fails.

Why, dear reader, might the dollar fail? Get ready for Bretton Woods III.

RTFA: http://en.wikipedia.org/wiki/Bretton_Woods_system

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world’s major industrial states. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.

Preparing to rebuild the international economic system as World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference. The delegates deliberated upon and signed the Bretton Woods Agreements during the first three weeks of July 1944.

Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Bank for Reconstruction and Development (IBRD) (now one of five institutions in the World Bank Group) and the International Monetary Fund (IMF). These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement.

The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value-plus or minus one percent-in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. In the face of increasing strain, the system collapsed in 1971, following the United States’ suspension of convertibility from dollars to gold. This created the unique situation whereby the United States dollar became the “reserve currency” for the nation-states which had signed the agreement.

FYI: The original Bretton Woods, according to Wikipedia.