The world‘s reference currency, the US dollar, almost had a different fate in history. In the aftermath of World War II, delegates from 44 countries gathered at Bretton Woods in New Hampshire to establish a new economic order for the post-war world. While the creation of the IMF and World Bank was agreed upon, one revolutionary idea proposed by British economist John Maynard Keynes was ultimately discarded: the Bancor, a common currency for all nations.
Keynes believed that the Bancor would promote global trade and economic stability by avoiding imbalances in trade and currency wars. However, the United States, as the emerging economic superpower with the most trusted currency, opposed the idea. Harry Dexter White, the chief American negotiator, saw the Bancor as a threat to US interests and the dominance of the dollar.
Despite Keynes’ noble intentions to create a more equitable international monetary system, the US prevailed in promoting the dollar as the world‘s reference currency. This decision shaped the global economy for decades to come, leading to the dollar’s dominance as the primary medium of exchange in international trade.
While the Bancor never came to fruition, its legacy serves as a reminder of the pivotal moment in history when the fate of the world‘s currency system could have been different. Today, the dollar remains the world‘s primary reference currency, underscoring the enduring impact of the decisions made at the Bretton Woods Conference.