This chapter evaluates the emergence and development of “surveillance” as the preferred non-compliance mechanism within the IMF architecture. This is thanks to its broad flexibility and original mechanism. The nature and scope of surveillance, as well as the factors explaining its success, will be assessed. In contrast, alternative dispute settlement mechanisms, such as international courts, have been resorted to in a limited way. This chapter will therefore highlight the specific role of international law within the field of international monetary relations, as well as illustrating how international monetary relations provide international law with original new tools and concepts.

The chapter considers the different levels of power, starting with the family and the extended family (the clan) and the local articulations of the state (communes, provinces, regions). The federalist state (a lively tradition in Italy, since Cattaneo) is opposed to the centralist state (the French Napoleonic model). In the globalized economy, multinational enterprises play an important role, occasionally up to the point of conditioning statal policies; the attitude towards them changes over time. State confederations, such as the European Union, and alliances, such as NATO, are also important. Political confrontations in the international arena involve different elements, from the traditional East–West opposition to the so-called clash of civilizations (i.e. religions). Migrations are also considered. The evolution of the international monetary system and the growing role of the European Union are also illustrated.

The creation of the Bank for International Settlements (BIS) in 1929 to deal with the settlement of First World War reparations payments was seen by central banks as an opportunity to put international cooperation on an institutional footing. Their initial vision of what the BIS might achieve in support of the gold exchange standard was ambitious. In the view of Montagu Norman and Hjalmar Schacht, the BIS needed to become a forum not merely for information exchange and for refining the techniques of managing the gold exchange standard, but a truly cooperative organisation capable of providing support to central banks in emergencies and for developing new financial arrangements. This chapter investigates the scope of the Norman-Schacht vision, as well as attempts to put this vision into practice (e.g. through the BIS study committee on medium-term credits, or through the BIS-coordinated interventions in the Austrian banking and financial crisis of May-June 1931). Based on research in the historical archives of the BIS, this chapter assesses whether the Norman-Schacht vision for the BIS failed because of differences in policies and goals among the central banks, or rather because of the disruptive effects of the Great Depression.

Chapter 1 is the introduction. I discuss the current state of the international monetary system (IMS), the “exorbitant privilege” of the United States and the history of the IMS. I explain how the United States seized the opportunity in the Bretton Woods conference to establish the USD as the reserve currency, and how the Bretton Woods system collapsed in 1972. Today, under the post-Bretton Woods system, developing countries like China adopt the “dollar standard” and peg their currencies to the USD. In doing so, China accumulates huge amounts of USD foreign reserves. It falls into the “dollar trap”. However, the global financial crisis sounded an alarm for China that the dollar-based IMS could be quite unreliable, e.g., there might be a shortage of the USD for trade finance. Thus, China began to accelerate the pace of RMB internationalization, aiming to make the RMB an international unit of account, medium of exchange, and store of value. However, this implies that its capital account has to be open, the financial market must be liberalized, and its exchange rate has to be more volatile. Is China ready to meet this challenge? This book investigates the necessary conditions for RMB internationalization to succeed and its prospects.

This introduction sets the stage, describing the evolution of the international monetary system during the 1930s and the tenets of the Tripartite Agreement, as well as providing a literature review.

This chapter explores the operation of the classical gold standard from the end of the nineteenth century to the verge of the First World War. Beyond providing context, surveying the classical era sheds light on a recurrent theme throughout this book: gold is not monolithic. There is not one way to be "on" gold, and there are many ways to be "off" it. Even during the classical gold standard, when reality came as close as ever to approximating the textbook model, no two countries had precisely the same monetary setup, and this multiplicity would only intensify in the postwar era.

This chapter draws out connections between the Tripartite Agreement and the Bretton Woods system, showing that the latter in many ways built on the former. Indeed, the principles articulated in the Agreement continue to motivate many of the goals for the international monetary system today. It concludes with lessons for improving international monetary cooperation based on the experience of the Tripartite years.

It is a commonplace to state that we live in a time of continuous change. But that doesn’t make it any less true. The force and impact of change become all the more obvious when considering a horizon that spans two generations. Fifty years ago, a mere handful of advanced industrial economies dominated the global economy. Since then, a wide array of countries have emerged as new economic powerhouses. Economic development and prosperity are now more equally spread across the globe than at any other time over at least the past two centuries.