by Richard Duncan
Then the Gods of the Market tumbled, and their smooth-tongued wizards
Withdrew, And the hearts of the Meanest were humbled and began to believe
It was true That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
— Rudyard Kipling, 1919
When the Bretton Woods international monetary system broke down in 1973, the world’s financial officials were unable to agree on a new set of rules to regulate international trade and monetary relations. Instead, a new system began to emerge without formal agreement or sanction. It also remained nameless.
The current international monetary system which evolved out of the collapse of Bretton Woods will be referred to as the dollar standard — so named because U.S. dollars have become the world’s core reserve currency in place of gold, which had comprised the world’s reserve assets under the Bretton Woods system as well as under the classical gold standard of the 19th century.