Christine Lagarde on the Future of Bretton Woods
Source details
- Canonical URL
- Christine Lagarde on the Future of Bretton Woods
Other formats
Bibliographic details
- Authors: CHRISTINE LAGARDE
- Published: June 1, 2019
Overview
- Letter addressed to the next generation reflecting on the 75-year history of Bretton Woods and calling for renewed global economic cooperation.
- Context: delegates from more than 40 countries met at Bretton Woods to design a postwar order aimed at avoiding the protectionist mistakes that worsened the Great Depression.
- Bretton Woods established the International Monetary Fund with three missions: promoting international monetary cooperation, supporting the expansion of trade and economic growth, and discouraging policies that would harm prosperity.
Historical achievements highlighted
- Over its 75-year history, the IMF has adapted while serving its 189 members with “wallet, brain, and heart”: policy advice, technical assistance and training, and financial support.
- Concrete outcomes cited:
- Trade has reduced the cost of living for a typical family in low-income countries by two-thirds, and in advanced economies, by a quarter.
- Globally, more than 1 billion people have climbed out of poverty.
- The Bretton Woods framework helped prevent the return to isolationist policies that contributed to the Great Depression and subsequent conflict.
Persistent and emerging challenges
- Enduring problems:
- Far too many still suffer from poverty and lack of opportunity.
- Young people are among the most disadvantaged.
- Many low-income countries will struggle to meet their Sustainable Development Goals by 2030.
- Poverty, rising inequality, and new technologies have sparked anger and resentment; corruption has eroded trust in institutions.
- Risks:
- Unilateral, go-it-alone approaches could lead to an “Age of Anger,” repeating historical breakdowns in international cooperation.
- Two priority issues raised by younger generations:
- Climate change threatens the future of the planet; “if you do not have a plan for the environment, you do not have a plan for the economy.”
- Corruption: the annual global cost of bribery alone amounts to $1.5 to $2 trillion and has corrosive societal effects.
- Reference to past financial instability: regulators should guard against the kind of financial excess that led to the debilitating global financial crisis 10 years ago.
Policy agenda and recommendations
- Domestic policy priorities:
- Fiscal policy must create broader opportunities through access to quality education, health care, and infrastructure—especially for those left behind.
- Pay special attention to young people and to women.
- Address excessive inequality via progressive tax measures that are country-specific and through stronger social safety nets to manage dislocations from technological change and globalization.
- Central banks should guard against inflation as “the worst tax on the poor.”
- Regulators must prevent financial excesses that can trigger crises.
- International policy priorities (a “new multilateralism”):
- Reform trade systems to address distortions while preserving the benefits of openness, which historically spread technologies, boosted productivity, and created jobs with higher wages.
- Reform international corporate taxation to ensure multinational companies pay their fair share and to preserve tax revenues needed for essential investment in people and infrastructure.
- Strengthen cooperation to tackle climate change and corruption as global collective-action problems.
Vision and call to action
- Advocacy for building an “Age of Ingenuity” grounded in a renewed commitment to global economic cooperation and shared prosperity.
- Emphasis on collective responsibility: “solidarity was self-interest,” and prosperity should not be “scattered here or there among the fortunate or to enjoy it at the expense of others.”
- Encouragement to the next generation to invent, innovate, and pursue greener and more inclusive policies to achieve greater prosperity for all.
Christine Lagarde, "Updating Bretton Woods," F&D Magazine, June 2019.
Content in this bundle
- كلام صريح - تحديث نظام بريتون وودز
- Updating Bretton Woods
- Christine Lagarde y el futuro de Bretton Woods – F&D | El FMI a los 75
- Christine Lagarde : l’avenir de Bretton Woods – F&D | Le FMI a 75 ans
- Откровенный разговор. Обновление Бреттон-Вудса – Финансы и развитие – июнь 2019 года
- 重拾布雷顿森林会议精神 - 金融与发展 - 国际货币基金组织季刊