Why the world needs a more just and inclusive monetary system 

As a result, Eurodollar markets emerged in European banks, and their operations inflated due to the significant inflow of money generated from oil and gas sales by Russia and Middle East countries in Eurodollar.

The first serious indicator of the danger such markets posed to the US was noted when French President Charles de Gaulle requested the US deliver a large amount in US dollars to the Bank of France in exchange for depositing its equivalent in gold under the terms of the Bretton Woods Agreement.

Thereafter, the US became wary of receiving similar requests at a time when it had exhausted a large portion of its resources on the Vietnam War.

Therefore, President Richard Nixon unilaterally delinked the US Dollar from gold on 15 August 1973, installing instead what was called the "Floating Exchange Rate" regime.

Under this new regime, currency rates were determined according to exchange market events instead of the "legal price" for each currency in relation to the corresponding reserve of gold.

As a result, the currencies of most countries were de facto priced according to the US Dollar instead of gold.

After the collapse of the Soviet Union and the reunification of Germany, the first challenge to the dollar supremacy came from Europe when a number of countries agreed to adopt one currency to be issued by a single central bank.

At that time, many analysts predicted that the world would witness "monetary dualism" due to the economic importance of the Euro region.

However, others had reservations from the get-go about the Euro being able to compete internationally against the US Dollar in the payment and settlement of international debts.

These analysts based their views on the non-integrated nature of finances in European countries, which could preclude the issuance of Euro-dominated treasury bonds that could compete with the US treasury bonds.

Challenges surmount

Since then, challenges have only multiplied. In 2008, the US was hit with a full-blown subprime mortgage crisis which affected many European countries including Greece, Cyprus, Italy, France, Portugal and Iceland.

Meanwhile, other obstacles prevented the Euro from becoming a global currency such as the weak financial systems of a number of European countries.

Again, BRICS countries failed to establish a system or fund for settling the financial rights and liabilities of the parties in preparation for playing an international role free from US influence.

One reason why such an endeavour failed was that the economics of such countries depended on exporting raw materials and products to foreign markets.

This exposed them to fluctuating exchange rates, as was the case with oil, and to fluctuations in demand, respectively.

Today, the Russian–Ukrainian War and the widening scope of tit-for-tat sanctions between Russia and the West demonstrate how weak the international monetary system is and why it is important to consider a "Bretton Woods II" to modify the system to diffuse the "Currency War" which is currently raging.

Bretton Woods shortcomings

The 1944 Bretton Woods Conference was not "international" in every sense of the word. In fact, the only active participants were the US and Britain. Russia attended only as an observer, suspecting the conference to be "a malicious tool" of capitalism — a view echoed by the Chinese.

The French delegation feared of a new AMGOT currency being developed by the US as it tried to do before when it prepared for landing on Normandy beaches with containers of such currency to promote among the French people.

The defeated Axis countries — Germany, Austria, Italy, Turkey, Spain and Japan — did not attend the conference.

As previously mentioned, Bretton Woods set the global currency of payment and clearance in US Dollars which angered Russia and China. Both countries kept trying to dethrone the US Dollar as the supreme currency.

The establishment of the rules of issuing a global currency was a dream for senior leaders, namely the late Pope John Paul II.

In his assessment of the capital system, the Pope described it as having deviations more dangerous than those that prevailed in communist society — the foremost of which was the monetary system.

Pope John Paul II advocated for the establishment of a fair monetary system where rights are protected, and obligations are met.

The governor of the Bundesbank (the Central Bank of Germany) from 1980 to 1991, Dr. Karl Otto Pohl, went even further. He called for amending human rights legislations to add the right to monetary stability and, by extension, for a monetary system that achieves desirable stability.

Achievable goal

This goal is not impossible to achieve. In fact, the framework already exists, it just needs to be further developed. The Bank of International Settlements (BIS) was initially established in 1930 to oversee Germany's payment of its post-World War I reparations.

Thereafter, the Americans tried to terminate the BIS for having served its purpose. Their attempts were in vain, however, losing the argument to the more popular opinion of making the BIS a forum for central banks to provide them with guidelines to achieve their mandates.

In this capacity, the BIS would also settle inter–bank financial operations through its budget and transactions regulated under special withdrawal rights.

Today, many are calling for a "Bretton Woods II" to be held, to consider the issuance of an international decision mandating BIS to issue the global currency "BancOr".

It would be based not on its component currencies as Keynes proposed, but mainly on gold transferred to BIS by the countries and entities intending to launch the new currency.

This would give the currency a strong and stable foundation which would benefit all participating parties.

-Toufic Chanbour is a professor of monetary and central banking law