The U.S. Treasury Secretary stated that the Bretton Woods institutions must be reformed.

Source: Cointelegraph Original text: "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 direction, suggesting that the global monetary order may be undergoing changes.

In a speech on April 23, Bessent called on the IMF and the 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 take a step back from their vast and unfocused agendas." He added: "The mission of the International Monetary Fund is to promote international monetary cooperation, facilitate balanced growth of international trade, encourage economic growth, and prevent harmful policies such as competitive devaluations of currencies."

Bessent calls on the International Monetary Fund to correct the trade imbalance between the United States and China. Meanwhile, the US dollar has fallen to its lowest point in three years, the US government debt has reached $36 trillion, and it faces fierce economic competition from China.

Investor and hedge fund manager Ray Dalio believes that the world is undergoing a global macroeconomic transformation that will disrupt the financial order established after World War II and may 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, stipulating that the currencies of 44 countries were pegged to the US dollar, which at the time was pegged to gold at a fixed exchange rate of $35 per ounce.

The main objective of the agreement is to eliminate the complex foreign exchange risks between freely floating currencies, thereby improving the efficiency of global trade.

In August 1971, U.S. President Richard Nixon announced the suspension of the convertibility of the dollar into gold—this move officially ended the Bretton Woods Agreement, although at the time this decision was considered temporary.

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 the World Bank, derived from the Bretton Woods Agreement, are still working to address the impact of freely floating fiat currencies on the foreign exchange market.

Bessent is optimistic about stablecoins protecting the dollar, while Bitcoin supporters have other ideas.

At the White House digital assets summit held on March 7, Bessent stated that stablecoins have the potential to drive international demand for the US dollar and US government debt instruments.

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

Bitcoin (BTC) extreme supporter Max Keiser opposes this plan, predicting that gold-backed stablecoins will surpass dollar-pegged stablecoins as people tend to seek low-volatility, inflation-resistant currencies.

In March of this year, Larry Fink, the CEO of BlackRock, wrote that the $36 trillion in U.S. Treasury bonds could prompt investors to turn to Bitcoin, as market participants begin to see Bitcoin as a better store of value than the dollar.

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

The analyst wrote that the turmoil caused by the ongoing trade war will lead to global inflation, prompting individuals to seek alternative stores of value such as Bitcoin, which will significantly drive up Bitcoin prices in the long term.

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