With war raging across the globe in July 1944, ministers from all 44 Allied nations met at the imposing Mount Washington Hotel in Bretton Woods, New Hampshire, to thrash out a set of rules that would govern world finance once Hitler was defeated
Knowing that greater international trade would help to prevent future wars, and determined to avoid another Great Depression, the delegates signed the Bretton Woods Agreements, creating the International Monetary Fund and the World Bank. It was a big vision, driven by grand historical figures: Winston Churchill, Franklin D Roosevelt and the British economist John Maynard Keynes.
But a system that was designed 64 years ago has, not surprisingly, proved ill equipped to deal with the fiendishly complex practices of 21st-century banking that led to the current worldwide crisis.
Neither the IMF, the World Bank nor any other institution has the power to police the global financial system in a way that might have prevented the excessive risk-taking which led to the sub-prime mortgage crisis and, in turn, the credit crunch.
A more recent creation, the G8 group of industrialised nations, looks hopelessly out of date without the emerging economic giants of Brazil, India and China among its ranks. And the "beggar-thy-neighbour" policies of guaranteeing savings that have sprung up in Germany, Greece and Ireland in recent days have shown that even in Europe, co-ordinated economic policy is a myth.
"The current system is in crisis and we have an environment where dog eats dog," said Bob McKee, of the economic consultancy Independent Strategy. "Electorates will expect more regulation, and politicians will push for it."
The new Business Secretary, Peter Mandelson, argued last week that new global solutions are needed because "the machinery of global economic governance barely exists", adding: "It is time for a Bretton Woods for this century."
Gordon Brown argued as long ago as January 2007 that global regulation was "urgently in need of modernisation and reform".
So, as the world's central bankers gather this week in Washington DC for an IMF-World Bank conference to discuss the crisis, the big question they face is whether it is time to establish a global economic "policeman" to ensure the crash of 2008 can never be repeated.
Top of the to-do list for any new or reformed body would be new rules to manage the level of risk that banks and financial institutions are allowed to take on.
Major economies already have regulatory bodies designed to keep financial institutions in check, such as the Financial Services Authority (FSA) in the UK and the Securities and Exchange Commission (SEC) in the US. But even if these bodies had done their job properly, opinions differ wildly between different countries over what constitutes an acceptable risk.
Take, for example, the Basle II Accord, a voluntary international agreement which might have seemed a crushing bore when it was published in 2004, but which just might have prevented the credit crunch if the world's major economies had realised it was actually a good idea.
In essence, Basle II, concocted by the Basle Committee on Banking Supervision, set up by 10 leading economic nations, was designed to make sure banks did not overstretch themselves by lending too much money in relation to the amount of capital they held.
If it had been implemented the moment it was written, Basle II might have prevented the collapse of Northern Rock – which had lent seven times the amount of money it held on deposit – and saved the likes of Lehman Brothers in America. Instead, motivated by national self-interest, not to mention greed, the world's major economies dithered, so that few, if any, had implemented the agreement by the start of 2008, with 95 countries only able to promise they would adhere to it by 2015.
We can only speculate whether a global policeman would have intervened in another seismic shift in economic policy: the abolition by the US president, Bill Clinton, in 1999 of the Glass-Steagall Act, which had, since 1933, separated retail banks from investment banks.
The Act had been passed during the Great Depression to prevent banks from speculating with depositors' money, and its repeal by Mr Clinton has been blamed by some commentators for contributing to the current financial crisis, which would have been limited to investment banks if Glass-Steagall had remained in place.
Too late, then, to remedy the missed opportunity of Basle II or to reinstate Glass-Steagall. But a new global regulatory arrangement might come just in time to address another issue troubling the world's financial watchdogs: mark-to-market accounting, about which we are likely to be hearing a great deal in coming weeks.
Mark to market is a system in which banks must declare the value of assets such as securities on a daily basis, forcing them to be transparent about their balance sheets. The assets must be valued in line with what they would fetch on the open market that day, and if their value has dropped, the banks must raise capital to make up the shortfall, even if they have no intention of selling the assets for another five or 10 years.
Many banks have argued that this is unfair, as those same assets will recover their value in the long term, and marking them down has, they claim, contributed to the current crisis of confidence.
Simon Ward, an economist at New Star Asset Management, said: "This kind of accounting is causing investors to see ghosts in banks' balance sheets which just don't exist. If we had suspended mark-to-market accounting a year ago, the current crisis may have been avoided."
Why has this become such a hot topic in recent days? Because banks in America have exerted such pressure on the SEC that rules on mark-to-market accounting may soon be relaxed, giving American companies an advantage over those in the UK, where the FSA has no intention of following suit.
As chaos reigns in the financial markets, the issue of regulatory reform is never far from the headlines. So what might a new architecture of global economic regulation look like?
In essence, any organisation with the power to police the global economy would have to include representatives of every major country – a United Nations of economic regulation. Robert Zoellick, president of the World Bank, identified the weakness of the current system this week when he said international organisations that excluded countries such as China, India, Brazil, Saudi Arabia, South Africa and Russia were outdated.
Gerard Lyons, a member of the International Council of the Bretton Woods Committee, a steering group for the IMF and World Bank, said: "We need to look at the current crisis and decide what banks have been doing well and what went wrong.
'The point we're at now is like the scene in Apollo 13 when one of the mission controllers says they're facing the worst disaster in Nasa's history, and his boss points out that it will turn out to be Nasa's finest hour if they get it right.
"We have an opportunity now to make changes in global banking that make sure we keep all the good bits and eradicate the bad. For example, there is nothing wrong with young people borrowing money against their expected future income if they have genuinely good prospects, but we need to prevent the sort of irresponsible lending to people with poor credit ratings that led to the sub-prime mortgage crisis.
"What we mustn't do is throw the baby out with the bathwater. The global banking system has helped increase living standards at a faster rate than at any point in history, and we are about to see the emergence of two-thirds of the world's population into the developed world."
Danny Gabay, a former Bank of England economist who now works for Fathom Consulting, suggested the answer might already be staring us in the face, in the form of the Bank for International Settlements (BIS), the umbrella organisation for the committee that came up with the sensible Basle II Accord.
"The BIS has been spot on throughout this," he said. "The problem is that it has no teeth. The IMF tends to couch its warnings about economic problems in very diplomatic language, but the BIS is more independent and much better placed to deal with this if it is given the power to do so."
The failures of modern global capitalism have been brutally exposed in recent months. Opinion is now hardening around the case for a new global architecture to enforce rules that ensure lessons are learnt and that the actions which have brought free markets to the brink of collapse are never repeated.
It remains to be seen whether the political leaders of 2008 are up to the task. If they are, the first foundations of that new world could be laid in Washington this week.
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