#MakingHistory X ANNIVERSARY EDITION THE WASHINGTON CONFERENCE ON POLITICAL AND ECONOMICAL STRATEGY FB.COM/MUNUR.ORG/ WWW.UROSARIO.EDU.CO/MUNUR/ GET READY TO MAKE HISTORY Index: LETTER OF 4 PRESENTATION HISTORY 4 OF THE COMMITTEE FUNCTIONS 6 OF THE COMMITTEE IMPORTANCE 10 OF THE COMMITTEE 12 TOPIC A TOPIC B 17 CHALLENGES AND OBJECTIVES FOR THE IMF 36 REFERENCES LETTER OF PRESENTATION Understanding the origins of the malfunctioning of the Bretton Woods system is of great American dollars—to twice the amount of its quota. In simpler terms, by putting in a very importance because its collapse led to the end of commodity money, an epoch-making break small quantity in gold, a country can borrow many times that amount in dollars or other in monetary history (Cesarano, p.2, 2006). valuable currencies (Hazlitt, p.54, 1984) e system appeared to work well during a couple of decades, but tensions quickly rose due My name is Eduardo Manuel Martín Ibárcena Callirgos e United Nations Monetary and Financial Conference, better known as the Bretton to an insecurity about the legitimacy of the dollar as a supporting currency. In particular, Woods Conference, was held in July 1944 with the objective of deciding the future of the some heads of state started questioning whether the USA truly had enough gold to back up and I will be your director of the aforesaid committee. I was born in Peru and raised in international monetary order after World War II (WWII). e conference was urgent as the amount of currency that was circulating. e doubts on the legitimacy of the dollar were Switzerland during my early years oh middle School. I nished High School and my many of the most important currencies in the world were not stable and a plan was needed further increased when it became evident that the USA was acquiring an enormous debt and International Baccalaureate in Perú and now currently I'm studying Business Administra- to “x and stabilize their national currency unit” (Hazlitt, p.47, 1984). ree main goals were it just had to print more money to pay. ese insecurities led some mandataries to return US tion and Marketing at ESAN Business School in Lima. achieved: the establishment of a xed exchange monetary system, the creation of the dollars to the USA in exchange for gold. International Monetary Fund (IMF) and the establishment of the International Bank for Regarding my MUN experience, it all started 3 years ago with Peruvian Universities, I had Reconstruction and Development (IBRD.) Because these doubts were, in fact, true, President Richard Nixon, in an attempt to mitigate the opportunities to participate in international conferences like World Harvard Model the possible damaged caused, signed a document for the “suspension of dollar convertibility United Nations 2017 and 2018 winning Diplomacy award in DISEC, Harvard National With the aim of achieving these goals, three commissions were established. e rst one was on 15 August 1971” (Cesarano, p.1, 2006). is suspension simply meant that there no Model United Nations Latin America with Outstanding Delegate awards and MUNUR in charge of Harry Dexter White, the head delegate of the USA, and its objective was to longer was a xed rate between dollars and gold and thus the end of the Bretton Woods 2017 where we won the Best Small Delegation award. Since then, I have served as director discuss the International Monetary Fund. e second held as a topic the International Bank System had come about. for DISEC and Crisis Committee’s in Peru and last year at MUNUR 18. for Reconstruction and Development and was led by John Maynard Keynes, the English head delegate and one of the most important economists of the twentieth century. And, nally, Economically speaking, according to Paul Krugman the Bretton Woods System had three I like to say I characterize myself as a very strategic person, always with a clear and specic there was a third commission chaired by Eduardo Suárez in which other economic issues that main goals. It would “foster full employment and price stability while allowing individual goal. For this committee, I intend you to develop structured proposals and strategic ideas, the other two commissions were not concerned with were discussed. countries to attain external balance without imposing restrictions on international creative but most important with a specic purpose. Needless to say, our committee should trade”(547) at is, it hoped to make all available labor resources be in use (full be guided under the scope of diplomacy and cooperation, emphasizing the need for e conference was of particular importance because it set the working of the international employment), a sustainable and slow change in prices of goods and services(price stability), exchanging ideas for developing strongly supported proposals. monetary system for several decades. Its main conclusion was that the economic objectives and a balance between the exports and imports of each country. that it had established could only be achieved through xing of each currency to the dollar and, in turn, the xing of the dollar to a gold standard. Specically, an equivalence of 35 As was explained earlier, it intended to do so by maintaining a xed exchange rate between Eduardo M. Ibárcena Callirgos dollars to an ounce of gold was established. the dollar and gold, and a xed exchange rate between the other currencies and the dollar. e Director latter was achieved by each country’s selling or buying of currencies to maintain a stable price. But of course, because the market is dynamic it was impossible to x such prices if there was e change was important as it avoided several problems that had been experienced in the not a pressure created in the system that followed the laws of supply and demand. erefore, past and could have lead to severe problems in the future. First of all, a stable exchange rate under the Bretton Woods system, it was part of the pact that it was the duty of each meant that countries couldn’t purposely devalue their currency to benet from trade. individual country to buy and sell currencies in order to maintain the appropriate balance as erefore, under such a system trade wars couldn’t have happened. dictated by the exchange rate. And, if it were the case that these countries couldn’t on their own furnish the capital to maintain the stability, then it was the role of the IMF to aid them Furthermore, it prevented countries from increasing the supply of money for paying debts, in obtaining the necessary resources. Hazlitt describes how this last step worked as follows: which was one of the main causes that had led to the 30. And yet, even though it provided Each country will make a maximum contribution in gold of only 25 percent of its quota, (...) good underlying support for the money, it was more exible than the gold-standard which On the basis of this quota, it can "buy" currencies of real value—meaning in the main various economists theorize aggravated the great depression and led it to have the consequences that it did. In fact, it could be the case (Paul Kruggman) that such a strong 4 dependence on gold might have lead central banks to be overzealous of protecting their own gold reserves which might have in turn prevented such banks from providing the liquidity needed to reduce the impact of the depression. Nonetheless, as we mentioned before, to make such a system work each country needs to buy and sell its own currency to maintain a stable exchange rate. And there might be situations where the country in question might not be able to do so because of a lack of funds. is is one of the roles the IMF serves. Given a situation where a country is unable to buy or sell what it needs the IMF works a central bank that is able to give loans to keep so that such a country might still hold the exchange rates xed. If such an institution didn’t exist it would simply be naïve to assume that at every point in time the country would have enough resources to behave nancially as it was stipulated in the agreement. LETTER OF PRESENTATION Understanding the origins of the malfunctioning of the Bretton Woods system is of great American dollars—to twice the amount of its quota. In simpler terms, by putting in a very importance because its collapse led to the end of commodity money, an epoch-making break small quantity in gold, a country can borrow many times that amount in dollars or other in monetary history (Cesarano, p.2, 2006). valuable currencies (Hazlitt, p.54, 1984) e system appeared to work well during a couple of decades, but tensions quickly rose due Dear Delegates, e United Nations Monetary and Financial Conference, better known as the Bretton to an insecurity about the legitimacy of the dollar as a supporting currency. In particular, Woods Conference, was held in July 1944 with the objective of deciding the future of the some heads of state started questioning whether the USA truly had enough gold to back up I believe that, if taken seriously, this committee will be a challenge. I hope that you arrive at international monetary order after World War II (WWII). e conference was urgent as the amount of currency that was circulating. e doubts on the legitimacy of the dollar were the sessions having more than a surface knowledge about the IMF, exchange rates or the many of the most important currencies in the world were not stable and a plan was needed further increased when it became evident that the USA was acquiring an enormous debt and World Bank.