by RAY FLEMING
IN July 1944, when World War Two was still being fought, representatives of the 44 Allied nations met at Bretton Woods, New Hampshire, US, to discuss proposals for a new international financial system that would prevent the wild fluctuations in exchange rates and other irregularities that had bedeviled world trade during the Great Depression of the 1930s.
American and British economists had been working on the proposals for more than two years and the outcome of the meeting was the Bretton Woods Agreement which, among other things, set up the International Monetary Fund (IMF) and the World Bank. For some years now there have been suggestions that after 60 years the Bretton Woods Agreement needed updating or replacing to take account of the needs of today's vastly different global economy.
It is against this background that the proposals put forward by Gordon Brown at yesterday's EU summit need to be judged. Essentially, these are for: an early warning system to anticipate possible financial problems and a framework to deal with them speedily; better surveillance of financial developments in all parts of the world than at present; a new world trade deal outlawing all protectionism. Mr Brown wants these proposals to be discussed at a World Summit later this year which might be attended by the American President-elect. This bold initiative does not assume that existing problems have already been solved but it does underline the importance of long-term as well as short-term thinking.