The genesis of the world monetary order from “Paris” to “Post-Jamaica” (historical-logical analysis)

Abstract

The article argues that the old world order is rapidly being replaced by a new one. The previous order, established after World War II, was shaped by the global rivalry between two superpowers with opposing political and socio-economic systems: The United States and the Soviet Union. In the early 1990s, the collapse of the USSR, and, with it, the so‑called “socialist camp,” gave rise to a unipolar world order dominated by the United States, replacing the former bipolar system. At the heart of any world order lies the global economic order, understood as the systemic unity of rules, laws, norms, and the supporting infrastructure of supranational organizations that define and regulate economic relations among states. The unipolar order that emerged carried a distinctly liberal character, sustained by a global economic framework rooted in free trade. The article conceptualizes the international economic order as the integration of global trade, financial, and monetary systems. It traces the historical development of the global monetary order, from the Paris monetary orderto the post-Jamaica monetary order, emphasizing how each subsequent order arose as an attempt to resolve the systemic contradictions inherent in its predecessor while maintaining essential connections to the previous system. Before the COVID‑19 pandemic, the US‑led unipolar world order propelled a phase of hyperglobalization, reinforcing the central role of the US dollar in the global economy. In this context, the dollar’s clear dominance in both international trade and global foreignexchange reserves can be described as “monetary globalization.” However, Western sanctions imposed on Russia began to challenge this dominance. The outbreak of Russia’s war in Ukraine ushered in a phase of confrontational globalization, accelerating the shift toward a multipolar structure: a transformation that inevitably impacted the global monetary order. Currency geopolitics, where geopolitical factors increasingly shape both the currencies used in international trade and the composition of foreign exchange reserves, is not a new phenomenon. Since the First World War, geopolitical motives have played a significant role in determining the choice of international currency. Although the geopolitical dimension remains influential in the era of currency globalization, it does not fully dominate the system. This suggests that currency globalization and currency geopolitics are complementary forces, with one generally prevailing over the other at any given historical moment. In the current uncertain geopolitical landscape, coupled with the risks stemming from Western sanctions against Russia, two notable developments are emerging: the accumulation of gold as an alternative reserve asset, and the growing use of diverse currencies in international trade. The euro, however, cannot be regarded as a reliable universal reserve asset. Structural and political limitations within the European Union, particularly the absence of coordinated fiscal policies among member states, undermine its stability and diminish its appeal as a viable alternative to the US dollar. China’s expanding role in global trade has fueled the rise of the yuan as an international currency. Nevertheless, objective constraints, such as strict government controls on capital flows, limited transparency in financial markets, and the centralization of one‑party political power, make many countries hesitant to adopt it as a reserve currency. The BRICS nations have announced plans to establish a new reserve currency, backed by a basket of their national currencies and gold. Yet unresolved institutional, organizational, and technical challenges leave that initiative far from realization. Three key conclusions emerge. First, a new world monetary order is taking shape, combining elements of monetary globalization and currency geopolitics, with the latter assuming a dominant role. Second, the growing geopolitical dimension of currency cannot be ignored. Third, while the future global monetary system is likely to be multipolar, the US dollar will, at least in the short to medium term, continue to hold its position as the primary instrument of international trade settlement and the world’s principal reserve currency.