U.S. Monetary Hegemony after the Collapse of the Bretton Woods System

Abstract

The Bretton Woods system (1944) founded inextricable monetary connections between the U.S. and many countries around the world, including Canada, Australia, and most Western European countries. It enabled the U.S. to build up its monetary hegemony in the world, possessing great influence on the global currency market. Since there were various limitations that existed in the inherent structure of the system and the U.S.’s inabilities to master the global market, the Bretton Woods System collapsed in less than 30 years. Nevertheless, though the Bretton Woods System ended in 1971, the U.S. did not lose its dollar hegemony and still owned considerable advantages in its monetary supremacy. This paper will provide the context of the Bretton Woods System of monetary management. Significantly, I will explore the reasons that gave rise to the U.S.’s continuous monetary hegemony, the pros and cons of dollar hegemony, and its expected challenges.