Source: Cointelegraph
Original: “U.S. Treasury Secretary Says Bretton Woods Institutions Must Reform”

U.S. Treasury Secretary Scott Bessent recently called for the "Bretton Woods institutions," such as the International Monetary Fund (IMF), to realign their focus, suggesting that the global monetary order may be undergoing changes.

Bessent, speaking at the Institute of International Finance (IIF) on April 23, urged the IMF and World Bank to correct trade imbalances and protect the value of fiat currencies to address exchange rate risks.

Bessent stated, "The Bretton Woods institutions must step back from their large and unfocused agendas." He added, "The mission of the IMF is to promote international monetary cooperation, facilitate balanced growth of international trade, encourage economic growth, and prevent harmful policies such as competitive devaluation of currencies."

Bessent called on the IMF to address the trade imbalance between the U.S. and China, while the U.S. dollar has fallen to a three-year low, U.S. government debt has reached $36 trillion, and there is fierce economic competition from China.

Investor and hedge fund manager Ray Dalio believes the world is undergoing a global macroeconomic shift that will disrupt the post-World War II financial order and ultimately replace the dollar as the global reserve currency, potentially in the form of digital currency.

Bretton Woods Agreement

The Bretton Woods Agreement was signed in 1944, linking the currencies of 44 countries to the dollar, which at the time was linked to gold at a fixed rate of $35 per ounce.

The main goal of the agreement was to eliminate the complex foreign exchange risks associated with freely floating currencies, thereby increasing the efficiency of global trade.

In August 1971, U.S. President Richard Nixon announced the suspension of the dollar's convertibility into gold—this move officially ended the Bretton Woods Agreement, although it was initially considered a temporary measure.

In that now-infamous speech, Nixon incorrectly told Americans, "Your dollar will be worth the same tomorrow as it is today."

The International Monetary Fund (IMF) and World Bank, which emerged from the Bretton Woods Agreement, continue to struggle with the impact of freely floating fiat currencies on the foreign exchange market.

Bessent Optimistic About Stablecoins Protecting the Dollar, Bitcoin Supporters Have Other Ideas

At the White House Digital Assets Summit on March 7, Bessent stated that stablecoins have the potential to drive international demand for the dollar and U.S. government debt instruments.

Bessent also added that the Trump administration would utilize stablecoins to protect the dollar and its status as the global reserve currency.

Extreme Bitcoin supporter Max Keiser opposed this plan, predicting that gold-backed stablecoins would surpass dollar-pegged stablecoins, as people are more inclined to seek low-volatility, anti-inflation currencies.

In March, Larry Fink, CEO of BlackRock, wrote that the $36 trillion U.S. national debt could prompt investors to turn to Bitcoin, as market participants begin to view Bitcoin as a more valuable store of value than the dollar.

Jeff Park, an executive at Bitcoin investment firm Bitwise, also made a similar prediction in February, focusing on the impact of President Trump's trade tariff policies.

The analyst wrote that the turmoil brought about by the ongoing trade war would lead to global inflation, prompting individuals to seek alternative stores of value like Bitcoin, significantly driving up Bitcoin prices in the long term.

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