The confidence problem of the Bretton Woods systems articulated by Robert Triffin refers to
A) the unwillingness of central banks to accumulate currency for fear of not being able to convert it to gold in case a run on the banks occurs.
B) consumer fear of stock market instability.
C) producer fear of rising wages.
D) the lack of convertibility of gold into silver.
E) low consumer spending because of balance of payment crises.

Question

Quizplus · Accepted Answer

The confidence problem of the Bretton Woods system, as articulated by Robert Triffin, refers to the dilemma faced by the United States as the issuer of the world's principal reserve currency (the U.S. dollar) under the Bretton Woods system. As other countries accumulated U.S. dollars as reserves, the U.S. had to run persistent trade deficits in order to provide sufficient dollars to the rest of the world. This undermined confidence in the dollar and the Bretton Woods system as a whole, as central banks feared that they might not be able to exchange their dollars for gold in the event of a run on the banks.

The Confidence Problem of the Bretton Woods Systems Articulated by Robert