The Dollar-Gold Standard’s Lingering Demise

Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)Monday, September 28, 2026Inter Press Service KUALA LUMPUR, Malaysia, September 28 (IPS) - The 1944 Bretton Woods (BW) conference accepted the US demand to use the dollar to settle international financial transactions. This arrangement would require a US balance-of-payments deficit to issue enough dollars. Jomo Kwame SundaramBut every dollar abroad was, in principle, a claim on US monetary gold. With dollar liabilities exceeding US gold reserves by the 1960s, the arrangement became more vulnerable. Bretton Woods At BW in July 1944, 44 allied nations met to design the post-war world monetary system. John Maynard Keynes represented the UK, no longer financially dominant due to its heavy public debt fighting two world wars. Harry Dexter White represented the US, which then held two-thirds of the world’s monetary gold, while other countries needed dollar loans for trade and reconstruction. The US promised foreign governments and central banks to convert dollars to gold. With the US BW promise to redeem an ounce of gold for $35, the dollar became the world’s reserve asset. Every other currency’s exchange rate was fixed against the d...