Updating Bretton Woods

• Author: Christine Lagarde
• Position: Managing director of the IMF
• Pages: 13-14

June 2019 | FINANCE & DEVELOPMENT 13

DEAR FRIENDS: I want to share with you a bit of our

history and some thoughts about the f uture—your

future! Seventy-ve years a go, delegates from more

than 40 countries met to a gree on new rules for the

global economy. It was a hot summer, so they gath-

ered in the cool mountains of New Ha mpshire at the

Bretton Woods resort. Most came from countries that

were still engul fed in the ames of World War II.

ey vowed to avoid the mistakes that led to that

terrible conict. In the prewar period, instead of

working together, countries pursued protectionist eco-

nomic policies that only made the Great Depression

worse. e result was mass unemployment and mass

anger. e seeds were sown for authoritarianism,

aggression, and war.

Bretton Woods launched a new era of global

economic cooperation, in which countries helped

themselves by helping each other. ey set out to

prove that solidarity was sel f-interest. e delegates

established the Internationa l Monetary Fund and

charged it with thre e critical missions: promoting

international monetary cooperation, supporting

the expansion of trade and ec onomic growth, and

discouragin g policies that would harm prosperity.

Since then, the world economy has changed in

fundamental ways. roughout its 75-year history,

the IMF has adapted to t hese changes while staying

true to its mandate. Today, it continues to serve its

members—who now number 189—with “wallet,

brain, and heart”: by providing high-ca liber policy

advice, technica l assistance, and tra ining to strengthen

institutions and capacity; giving nancial support

and breathing space to countr ies in crisis while they

undertake needed p olicy steps; and designing better

policies to improve people’s lives.

Did the delegates succeed in their goals?

Emphatically, yes. Today, most people live longer,

healthier, better lives. Countries trade more with each

other, which helps them grow faster, creates more jobs,

and lifts incomes. In low-income countries, trade

has reduced the cost of living for a typical family by

two-thirds, and in advanced economies, by a quarter.

And globally, more than 1 billion people have climbed

out of poverty.

At the same time, far too m any still suer from

poverty and lack of opportun ity. Young people are

among the most disadvanta ged. Many low-income

countries will str uggle to meet their Susta inable

PHOTO: IM F

Updating Bretton Woods

In a letter to the next generation, Christine Lagarde calls for a

renewed commitment to global economic cooperation

Christine Lagarde

STRAIGHT TALK