Dollar Bloc Dependency in Latin America: Beyond Bretton Woods

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Abstract
The international financial regime is undergoing a significant transition as the Bretton Woods regime weakens and new norms and principles emerge. One change is the emergence of “currency blocs” which serve to stabilize regional financial relations. This paper argues that Latin America and the U.S. are linked in an emerging dollar bloc that has created a new form of Latin American dependency. The centrality of the dollar in the financial structure of Latin America is documented, and an overview of the historical currency blocs, the sterling and franc blocs, is provided. This historical treatment provides the basis for an analysis of the mechanisms and operation of the dollar bloc and for an assessment of the current factors in its evolution. Three specific issues are investigated: the adjustments to the rules and decision-making in the dollar bloc that are currently in progress, the relation of the dollar bloc to the re-democratization of Latin America, and the international financial context provided by the European Monetary System and the growth in the yen's importance.

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