Yonela Mlambo and Dugan Brown
The Bretton Woods system, International Monetary Fund, and World Bank, established in 1944 became a seminal international monetary institution aimed at promoting economic stability and facilitating post-World War II reconstruction.
Theoretically, these institutions were germaine to the times, and the international community should have supported their missions and objectives as they were noble.
Nonetheless, these institutions lost credibility and international hegemony because of their 1970s policies and terms and conditions to their debtors which we cannot be able to adumbrate them all here.
These institutions offered loans to many African states and imposed structural adjustment programmes and austerity measures to African states and many other non-Euro-American states.
Structural adjustment programmes and austerity measures saw many states altering their fiscal policies through decreasing spending on numerous welfare programmes in compliance with Bretton Woods institutions loan terms and conditions.
These measures plunged African economies into recessions and depression, and many citizens experienced political instabilities and became destitute.
Bretton Woods manipulated the exchange rates through pegging the US dollar with other currencies.
The pegging of the US dollar against other currencies resulted in fake exchange rates that did not represent individual countries' genuine economic conditions, and chronic trade imbalances.
The Bretton Woods institutions gave the US tremendous power over the global economy dominated by the Euro-Americans powers.
Developing countries had limited representation and decision-making in the institutions.
Non-Euro-American nations felt discontented and disillusioned as a result of the lack of diversity in the institutions.
The Bretton Woods institutions frequently imposed conditionalities and policy prescriptions that were not necessarily favourable to particular countries' specific development needs.
The institutions were chastised for prioritising macroeconomic stability above long-term sustainable development as a result of this approach.
The pitfalls for the Bretton Woods institutions offer the BRICS New Development Bank lessons if it wants to challenge the dominance of the Bretton Woods institutions.
The New Development Bank should implement a flexible exchange rate regime that allows member countries to regulate their currencies in accordance with their economic circumstances.
This would limit the probability of speculative attacks by preventing the building of trade imbalances.
The New Development Bank must establish effective procedures to foster member-country cooperation and to facilitate appropriate adjustments in response to economic changes.
To avert currency domination, the New Development Bank should explore diversifying its reserve holdings and encouraging the use of several currencies in international trade and finance.
This would lessen the hazards of over reliance on a single currency while also increasing financial stability.
The New Development Bank should prioritise inclusive governance systems that give all member countries equal representation and decision-making power (not to be dominated by China and Russia).
This strategy will create trust, cooperation, and ownership, and ensure that the bank's policies and activities represent its member states' different interests.
The New Development Bank should emphasise a development approach that takes into account the individual states requirements and goals of its member countries.
Mlambo is a freelance socio-political commentator and Brown is a Bachelor of Social Science student at UCT.