The international monetary system was never neutral. It was the product of power, politics and post-war compromise, forged in July 1944 at the Bretton Woods conference in New Hampshire. There, representatives of 44 Allied nations gathered to design a framework that would prevent the financial chaos and competitive devaluations that had deepened the Great Depression and fueled geopolitical tensions.
What emerged was not merely a technical arrangement of exchange rates. It was a political settlement that elevated one country’s currency—the US dollar—to the status of global money. Under the system, currencies were pegged to the dollar, and the dollar was convertible to gold at $35 an ounce. In effect, global finance would orbit around Washington.
The design bore the imprint of American negotiator Harry Dexter White, whose plan placed the United States at the center of post-war monetary governance. It prevailed over the objections of British economist John Maynard Keynes, who warned that anchoring the system to a single national currency would create structural imbalances and asymmetric burdens over time.
For decades, the arrangement appeared to work. The Bretton Woods era underwrote rapid reconstruction in Europe and Japan, stable exchange rates, and expanding global trade. Institutions such as the International Monetary Fund and the World Bank were created to manage balance-of-payments crises and fund development. The dollar became the world’s primary reserve asset, lubricating trade and investment across continents.
But the core asymmetry of the system—its dependence on a national currency to perform global functions—never disappeared. When the US abandoned gold convertibility in 1971, effectively ending the original Bretton Woods framework, the world moved into a floating exchange rate regime. Yet the dollar’s dominance persisted. Today’s global economy is multipolar in production, consumption and distribution, but unipolar in its financial architecture.
The dominance of the US dollar has created a structural imbalance that economists have debated for decades. The issuer of the world’s reserve currency can run persistent current-account deficits, financing them by issuing liabilities that the rest of the world is eager—or compelled—to hold. Other countries must adjust through painful austerity, currency depreciation, or reserve accumulation.
This dynamic gives the United States what former French finance minister Valéry Giscard d’Estaing once described as an “exorbitant privilege.” Washington can finance domestic spending and foreign commitments at lower cost, while the rest of the world absorbs the spillover effects of American monetary policy.
When the US Federal Reserve tightens interest rates to combat inflation at home, capital often flows out of emerging markets, weakening their currencies and raising debt-servicing costs. When it loosens policy, asset bubbles can form in developing economies. Dollars are American in origin, but their consequences are global.
This is precisely the dilemma Keynes foresaw. At Bretton Woods, he proposed a neutral international currency—“bancor”—to be issued by an International Clearing Union. Instead of relying on a national currency, global trade would be settled in this supranational unit of account. Both deficit and surplus countries would face discipline: excessive imbalances would trigger automatic adjustments.
Keynes’s proposal was rejected. The US, emerging from the war as the dominant economic power, preferred a system that entrenched its financial leadership. Eighty years later, however, the conditions that once justified that arrangement have changed dramatically.
Emerging economies now account for the majority of global growth and an increasing share of trade, savings and investment. The expanding BRICS grouping—comprising Brazil, Russia, India, China and South Africa, and now including additional members—represents a significant portion of global GDP and population.
Through institutions such as the BRICS and its New Development Bank, the Global South has sought to create alternatives to Western-dominated financial structures. Yet despite this economic shift, the international monetary system remains anchored to the dollar.
Critics often frame the debate as a geopolitical contest between the dollar and rival national currencies, particularly China’s renminbi. But this is the wrong lens. Replacing one hegemonic currency with another would merely reproduce the same asymmetries and vulnerabilities.
A renminbi-dominated system, for example, would likely confront the same tensions between domestic priorities and global responsibilities that characterize dollar hegemony. Moreover, China—despite being the world’s largest exporter of manufactured goods and a technological powerhouse—has shown little appetite for turning its currency into a fully global reserve asset. A sharply appreciating renminbi could undermine export competitiveness and disrupt domestic economic stability.
The deeper issue is not which national currency prevails, but whether a national currency should serve as global money at all.
The most compelling alternative lies in reviving Keynes’s core insight: the need for a neutral, non-national unit of account for international settlement. A BRICS-led clearing currency—structured as a basket of member currencies and possibly commodities, or as a digital settlement unit—could approximate this vision.
Such a currency would not replace national currencies in domestic use. Nor would it immediately supplant the dollar as a reserve asset. Instead, it would function primarily as a unit of account and clearing mechanism for cross-border trade and financial transactions among participating countries.
The principle is crucial: neutrality. No single country would control issuance or governance. Decision-making would be multilateral, with transparent rules and rotating leadership structures. This would reduce the risk that the system could be weaponized for geopolitical leverage.
In recent years, the US has increasingly used financial sanctions, regulatory oversight and access to the dollar-based payments system as tools of foreign policy. While sanctions can serve legitimate purposes, their frequent use has raised concerns about systemic overreach and fragmentation of global finance.
A neutral clearing currency would not eliminate sanctions, but it would reduce the risk that entire economies are destabilized through exclusion from the dominant payments network. Trade and financial flows could continue through a multilateral mechanism less vulnerable to unilateral political decisions.
At the heart of Keynes’s design was a principle largely absent from the current system: symmetry of adjustment.
Under today’s regime, deficit countries bear the brunt of correction. They must cut spending, raise taxes or devalue their currencies to restore balance. Surplus countries, by contrast, face little pressure to expand domestic demand or rebalance their economies.
In a modern clearing union, both sides would share responsibility. Persistent surplus countries would incur charges on excessive reserve accumulation, encouraging them to invest abroad or stimulate domestic consumption. Deficit countries would have access to overdraft facilities within agreed limits, preventing abrupt contractions that devastate employment and social stability.
This approach would mitigate the global deflationary bias that arises when many countries pursue export-led growth simultaneously. Chronic underconsumption and excessive savings in surplus economies contribute to stagnation elsewhere. A symmetric framework would promote more balanced, demand-driven growth.
For many nations in Africa, Asia and Latin America, the current dollar-centric order imposes severe constraints. To protect themselves from currency crises, governments accumulate vast dollar reserves, often investing them in low-yield US Treasury securities. These funds represent foregone domestic investment in infrastructure, healthcare, education and climate resilience.
Moreover, when balance-of-payments crises erupt, countries frequently turn to the IMF, where loan programs may come with stringent conditionalities emphasizing austerity and structural reform. While such measures can restore macroeconomic stability, they often entail social and political costs.
A BRICS-anchored clearing union could provide an alternative source of liquidity and development financing, reducing dependence on emergency assistance from Western-dominated institutions. It would not eliminate the need for fiscal discipline or sound governance, but it could broaden the policy space available to developing economies.
In this sense, the initiative is not an argument against open markets. Rather, it seeks a fairer infrastructure for openness—one that does not privilege the domestic policy needs of a single country over the stability of the entire global system.
Skeptics argue that global financial orders are deeply entrenched in legal contracts, financial markets and political alliances. They do not change easily. Yet history shows that transformation often follows crisis.
The collapse of the classical gold standard after World War I, the creation of Bretton Woods in 1944, and the shift to floating exchange rates in the 1970s were all once considered improbable. Each change reflected new economic realities and shifting power balances.
A transition to a 21st-century bancor need not be revolutionary. It could begin incrementally: expanding local-currency trade settlements among BRICS members; issuing bonds and development loans denominated in a common unit; establishing a digital clearing platform for cross-border payments; and gradually broadening participation to include other emerging and advanced economies.
Over time, such mechanisms could coexist with the dollar system, offering diversification and resilience. As confidence grows, the clearing currency’s role could expand.
For any new system to succeed, governance will be paramount. Emerging economies have long criticized their underrepresentation in the IMF and World Bank. A BRICS-led initiative must avoid replicating similar imbalances within its own structure.
Transparent rules, equitable voting arrangements and accountability mechanisms will be essential. Economic weight should be balanced with regional representation to prevent dominance by any single member, including China.
If Bretton Woods reflected the power realities of 1945, a new settlement must reflect those of 2026. The world economy is no longer defined by a single hegemon. It is characterized by interconnected supply chains, digital finance and shifting centers of gravity.
The choice confronting policymakers is not between stability and chaos. It is between an aging system that generates recurrent volatility and a reformed architecture that internalizes the lessons of history.
A neutral, rules-based and symmetric financial order would not abolish crises. Markets would still fluctuate, and economic cycles would persist. But the frequency and contagion of crises could diminish. Adjustment burdens would be shared more equitably. Developing nations would gain greater room to pursue industrialization, job creation and climate investment.
For decades, the architecture of global finance has been written in the language of power. The dollar’s dominance has conferred advantages on its issuer while exposing others to external shocks. As geopolitical tensions rise and protectionist currents reemerge, trust in the system erodes.
The Global South, through BRICS+ and related initiatives, now possesses both the incentive and capacity to press for change. The question is no longer whether reform is desirable, but whether delay carries greater risks.
Eighty years after Bretton Woods, Keynes’s rejected bancor proposal has returned—not as a nostalgic relic, but as a practical response to a multipolar world. Whether through a BRICS-led clearing union or broader multilateral negotiations, the debate over a neutral international currency is gaining urgency.
The architecture of the 20th century delivered decades of growth and integration. But legitimacy in the 21st century will depend on inclusivity, fairness and shared responsibility. As economic power diffuses across regions, the monetary order must evolve accordingly.
History suggests that global systems endure not because they are permanent, but because they adapt. The world now faces a familiar moment of inflection. The settlement of 1944 shaped the post-war era. The settlement of the coming decade may define the next.
