The International Clearing Union (ICU) was one of the institutions proposed to be set up at the 1944

United Nations Monetary and Financial Conference The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 allied nations at the Mount Washington Hotel, in Bretton Woods, New Hampshire, United States, to ...

Bretton Woods, New Hampshire Bretton Woods is an area within the town of Carroll, New Hampshire, United States, whose principal points of interest are three leisure and recreation facilities. Being virtually surrounded by the White Mountain National Forest, the vista from B ...

, in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

, by

British British may refer to: Peoples, culture, and language * British people, nationals or natives of the United Kingdom, British Overseas Territories and Crown Dependencies. * British national identity, the characteristics of British people and culture ...

economist

John Maynard Keynes John Maynard Keynes, 1st Baron Keynes ( ; 5 June 1883 – 21 April 1946), was an English economist and philosopher whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originall ...

. Its aim was to establish regulation of currency exchange, a role eventually taken by the

International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution funded by 191 member countries, with headquarters in Washington, D.C. It is regarded as the global lender of las ...

(IMF). The International Clearing Union (ICU) would be a global bank whose role would be the clearance of trade between nations, similar to a

trade exchange An association of businesses formed for the purpose of trading with one another, using mutual credit to keep account. Typically the lead business will run the exchange, performing a brokering services and providing (or renting) an online marketpl ...

with every country as a member. All international trade would be denominated in a special unit of account, the proposed bancor. The bancor was to have had a

fixed exchange rate A fixed exchange rate, often called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency, a currency basket, basket of other currenc ...

with national currencies, and would have been used to measure the

balance of trade Balance of trade is the difference between the monetary value of a nation's exports and imports of goods over a certain time period. Sometimes, trade in Service (economics), services is also included in the balance of trade but the official IMF d ...

between nations. Goods exported would add bancors to a country's account, while goods imported would subtract them. Each nation would be incentivized to keep their bancor balance close to zero by one of two methods: in the case of an excessively positive bancor balance, part of their surplus would be taken and applied to the Clearing Union's Reserve Fund. In the case of an excessively negative bancor balance, their currency’s exchange rate would be lowered, making imports more expensive and exports cheaper. In this way nations would be encouraged to buy other nations’ products. Gold and national currency would no longer be used in international trade and no longer move between countries.

External links

International Clearing Union
House of Lords Hansard, 18 May 1943 vol. 127 cc520-64.
George Monbiot on an International Clearing Union
International Monetary Fund World Trade Organization International economic organizations Gold standard Keynesian economics {{poli-org-stub

See also

External links