BRETTON WOODS INSTITUTIONS, GLOBAL RECESSIONS AND THE MALAYSIAN ECONOMY

Abstract

The Bretton Woods Institutions of the International Monetary Fund (IMF) and the World Bank were established in 1944 to assist all countries to coordinate trade and investment towards supporting development. When Keynes orchestrated its launching, he had sought an egalitarian governance framework to support trade and investment. A fixed exchange rate mechanism was established to support trade and investment flows, and the settlement of balance of payment deficits, and debt. The early major fissure to such a system to threaten such a goal came in the form of the US withdrawing from the fixed exchange rate mechanism in 1971. It has since faced considerable contentions as many considered the US to enjoy asymmetric powers to shape the conduct of the IMF and the World Bank. The latest of such problems arose following the breakout of the Russia-Ukraine war in 2022 and the subsequent introduction of trade sanctions against Russia. This paper analyses the economic consequences of trade sanctions and their implications for the Malaysian economy.