A new Bretton Woods

The Bretton Woods system

In July 1944, what would come to be known as the Bretton Woods system was established in the New Hampshire town of the same name. 

The purpose of this system was to establish new global rules for monetary policy, trade relations and international financial relations. 

The world’s most industrialized countries came together and from that moment until 1971, when they were replaced by new rules, they led the world into a new era. 

Currencies were no longer tied to gold and the US dollar officially became the main currency and the reference currency for other currencies. 

Exchange rates were to be as stable as possible, and monetary policies and central bank interventions around the world were to be geared towards this. 

From 1971 onwards it was replaced by the Smithsonian Agreement without major changes, in line with the vision of the participants in the first agreements. 

A new Bretton Woods

Since the outbreak of the war in Ukraine (i.e. from 24 February this year), both the Ukrainian and Russian sides have also been financed by large amounts of capital from cryptocurrencies.

The Ukrainians and Russians, in order to finance themselves and to escape the sanctions of the international community and NATO, have drawn heavily from Bitcoin and its companions. 

This generated an appreciation of the virtual currency and over time the idea of an opportunity arose. 

If the dollar replaced gold, could Bitcoin or a virtual currency replace the dollar? 

This is one of the questions that have been on the minds of the world’s leaders, especially in Europe and Russia. 

The possibility of a new Bretton Woods is being explored around this idea.

Regardless of the conflicts, there is the possibility that the borders and rules of international trade, commerce and monetary policies will be redrawn again, this time with a spotlight on cryptocurrencies. 

The idea has caused a stir but more and more analysts are convinced that at least the powerful of the earth should talk to each other to examine this hypothesis and to give common rules valid across the planet. 

Alex Borniakov, the Ukrainian deputy minister for digital transactions, spoke on the subject. 

Borniakov pointed out that transactions have grown exponentially going from being infrequent to minute by minute. 

Millions have been raised to finance defence, and in concrete terms, this has enabled the purchase of bulletproof vests and at least 400,000 military rations for the Kyiv militia. 

The apparent success in raising funds through crypto has attracted attention and is a new process in an old world, at least financially. 

Meanwhile in Russia

In Russia, the productive fabric is losing large swathes of the market due to the political choices of the parent companies and falling demand. 

But the fall in demand has brought surprises when, for example, McDonald’s Russia announced the closure of its stores in the country, and in Moscow’s McDonald’s there were long queues for the last Big Mac. 

The American company chose to close its doors in the country, following the path already taken by Starbucks, Coca-Cola, Pepsi and Ikea. 

The company, however, despite the fact that it is depriving itself of income from consumer sales, is maintaining its workforce, which could be useful if diplomacy is successful.