Op-ed: Bretton Woods principles without Bretton Woods politics

[Ben Graham]

Long before modern states claimed monopoly control over money, international trade depended on trusted systems that operated outside sovereign authority.

In medieval Europe, merchants travelling between cities and kingdoms faced a familiar challenge. Transporting physical gold, much as today, was dangerous, inefficient, and vulnerable to theft, seizure, or political interference. In that environment, the Knights Templar emerged as an unexpected solution.

Stripped of modern lore and conspiracy, their rise was driven by practical economics. Acting as a trusted, non-state custodian of gold and silver, the Order allowed merchants to deposit bullion in one location and draw against it in another, even minting its own coins. In effect, the Templars built an early asset-backed settlement network beyond state control, enabling commerce across political boundaries.

As debate intensifies over the US dollar’s role as the global reserve currency and speculation grows about possible successors, a more fundamental question emerges. Instead of replacing one sovereign-controlled reserve currency with another, should the world revisit the idea of a gold-backed reserve system not controlled by any sovereign actor at all?

Sound principles, unsustainable solution

The postwar Bretton Woods system rested on a correct insight: global trade needs a stable monetary anchor, and gold performs that role better than any alternative. By tying the US dollar to gold and other currencies to the dollar, the system imposed discipline and predictability on international commerce. For a time, it worked.

What Bretton Woods failed to account for was political reality. The system required one nation to subordinate its domestic priorities indefinitely to the needs of the global economy. That was never sustainable, nor a moral failing of the United States. As fiscal pressures, geopolitical commitments, and internal demands accumulate, strict gold convertibility becomes untenable for any country.

The collapse of Bretton Woods is better understood not as a rejection of asset-backed money, but as recognition of immutable political limits. When monetary discipline collides with political imperatives, politics always wins.

Fiat dominance, false exits and a doomed BRICS proposal

More than 50 years after gold convertibility ended, the US dollar remains the world’s dominant reserve currency. Deep capital markets, unmatched liquidity, and relatively predictable legal institutions have made it the least bad option for global trade and settlement.

That dominance does not imply satisfaction. Inflation, sanctions, and geopolitical tension have repeatedly revived predictions of the dollar’s decline. While those forecasts have proven premature, they reflect real discomfort with a reserve system anchored to a fiat currency shaped by the domestic politics of a heavily indebted and increasingly unpredictable United States.

Proposed exits from the current system tend to fall into two camps: restoring a gold-backed US dollar or shifting to another sovereign currency. Both approaches share the same flaw. They assume the problem can be solved by choosing a better sovereign steward.

A re-gold-backed dollar would again require the United States to place monetary discipline above domestic politics indefinitely, a constraint that was unsustainable decades ago and is even less plausible today.

The latest alternative is a proposed gold-backed BRICS currency. The logic resembles replacing a biased referee with one hired by the opposing team. It changes who benefits from the bias without eliminating it. Replacing dollar dominance with BRICS dominance merely redistributes political influence over money.

That is why, despite loud rhetoric, the world is unlikely to settle trade in a BRICS currency anytime soon, just as it will not see the return of a gold-backed US dollar.

Tether’s gold accumulation is a signal

Tether has reported accumulating roughly 140 tons of physical gold, stored in secure Swiss vaults repurposed from underground nuclear shelters. Purchases often exceeding $1 billion a week show little sign of slowing, suggesting some sophisticated actors are preparing for continued erosion of confidence in fiat reserves.

This does not make Tether the heir to the global reserve currency. Its holdings remain far smaller than those of major central banks, and questions persist around governance, transparency, and regulation. The issuer matters less than the signal. Tether’s strategy highlights the convergence of two elements historically difficult to combine at scale: a politically neutral reserve asset and a modern, globally interoperable settlement system.

Gold offers unmatched credibility as a reserve asset but has long struggled as a medium of exchange. Stablecoins excel where gold falls short, providing speed, divisibility, and low-friction cross-border settlement. Tether’s move raises the possibility that a gold-backed stablecoin, independent of sovereign control, could eventually reappear in a modern form.

Bitcoin proponents argue that Bitcoin already solves this problem. While its non-sovereign, censorship-resistant design has appeal, reserve currencies are chosen for stability and institutional acceptance, not ideological purity. Price volatility, protocol-based governance, and limited central bank tolerance make Bitcoin ill-suited as a primary global reserve asset. Progress does not always require abandoning the past.

Seen this way, Tether’s gold accumulation functions less as a forecast than as a provocation. It forces a serious reconsideration of whether gold’s credibility and crypto’s infrastructure can be combined into a more durable global system.

Revival of rules-based order

At recent gatherings in Davos and elsewhere, leaders have warned of the breakdown of the rules-based international order. The debate often focuses on bad actors breaking rules or good actors failing to enforce them. That framing misses the deeper problem.

Rules that rely on political self-restraint are not rules but expectations, and expectations fail when incentives change. Bretton Woods collapsed not because its principles were flawed, but because it depended on a sovereign consistently acting against its own political interests.

If a rules-based order is to endure, its core functions must rest on constraints, not discretion. In global finance, that points to a system where trust is anchored in assets and architecture rather than national power or goodwill. Bretton Woods principles without Bretton Woods politics may sound ambitious, but in a world increasingly aware of the limits of discretion, it may be the only viable path forward.

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* Erik Groves is Corporate Strategy and In-House Counsel at Morgan Companies.The views and opinions expressed in this column are those of the author and do not necessarily reflect the official position of MINING.COM or The Northern Miner Group.