The system that resulted from the arrangements that came from the IMF intervention in the East Asian financial crisis in the late 1990s has come to be called "Bretton Woods II" because
A) US trade surpluses currently drive growth in East Asia, just as they drove early postwar growth in Europe.
B) the system is stable as long as East Asian countries are willing to accumulate US government securities like Europeans did with U.S. gold.
C) US trade deficit drives growth in East Asia, and floating exchange rate stabilize the value of the dollar.
D) the system is stable as long as East Asian countries are willing to accumulate US gold like Europeans did.
E) the system is still based on fixed exchange rates and IMF interventions.

Question

Quizplus · Accepted Answer

The term "Bretton Woods II" refers to the informal arrangement where East Asian countries, particularly China, accumulate large reserves of US government securities to maintain their currency exchange rates at a competitive level, similar to the original Bretton Woods system where countries held US dollars as a reserve currency pegged to gold. This accumulation supports the US dollar and allows the US to run large trade deficits, particularly with these East Asian countries, fostering global economic stability as long as these countries continue to support the US dollar in this manner.

The System That Resulted from the Arrangements That Came from the IMF