Scott Bessent’s Bretton Woods Moment Is Here

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Scott Bessent’s Bretton Woods Moment Is Here

About the author: Emil W. Henry Jr. is a former U.S. Treasury assistant secretary and is the founder and CEO of the private-equity firm Tiger Infrastructure.

Whatever one thinks of President Donald Trump’s business acumen or tariff policies, his treasury secretary, Scott Bessent, is a man of the markets. Bessent surely recognizes that the tariff negotiations with China will create opportunities beyond just resolving his boss’s trade immediate grievances.

As Trump’s lead negotiator in London this week, Bessent helped establish a tentative framework between the U.S. and China to ease trade tensions. He should now seize the moment to shape a more durable framework that ensures global economic stability, secured by long-term American financial pre-eminence—just as Treasury Secretary Harry White did at Bretton Woods in 1944.

The original Bretton Woods system emerged amid intense political and economic instability. As World War II ended, leaders sought to avoid the destabilizing currency devaluations, monetary fragmentation, and economic nationalism that preceded the war. America’s vast gold reserves and industrial scale made it the natural reserve currency issuer.

And so the world started holding U.S. dollars as a store of value, while the U.S. provided liquidity and monetary discipline. It also created the International Monetary Fund and the World Bank to promote stability and reconstruction. This architecture stabilized exchange rates and institutionalized U.S. economic leadership. It produced 75 years of order—an order now being tested not by tanks but by new alliances, new technologies, and new ways of thinking.

In the 1940s, the crisis was postwar reconstruction. Today, the risks are different but no less urgent. In an era of multipolar realignment, the global monetary system is quickly fragmenting, with China sitting at its center.

When I oversaw the issuance of U.S. Treasury securities in 2005-07, China was quickly becoming one of the largest holders of U.S. government debt. Alongside the Federal Reserve, we studied whether the China’s holdings and purchasing power could become a geopolitical weapon. The clear conclusion: No other market was large or liquid enough to absorb China’s reserves. The Treasury market was their only realistic outlet.

That analysis was based on a reality that no longer exists. U.S. financial dominance is eroding due to rising debt, geopolitical shifts, and active de-dollarization by major economies, which includes state-sponsored digital currencies, alternative trade blocs, and increasing nondollar settlement.

Beijing is capitalizing on this. While more than 80% of global trade is still invoiced in dollars, China is pushing renminbi settlement with Russia, Iran, and its other Belt and Road partners. It has developed a central bank digital currency with over $250 billion in pilot transactions, and it has aligned with the other Brics countries to further weaken dollar dominance. The share of global reserves in dollars has fallen from 71% in 1999 to 58% today.

The danger of these developments to world markets are twofold. China’s strained housing market, extreme export dependence, and opaque regulation render its economy too fragile to support a reliable reserve currency. And its trade, diplomatic, and military policies undermine global stability.

U.S. negotiators leveraged the Bretton Woods talks to solidify dollar dominance and create a stable global financial order. Bessent must now do the same. Reach beyond resetting trade imbalances and create a new financial alignment, one that solidifies dollar centrality and U.S. economic leadership as the price of trade normalization. Several principles should guide his efforts.

First, major trading partners of the U.S., including China, should have to hold a defined minimum portion of their reserves in dollars, creating stable, sustained demand for Treasuries and dollar assets. China must also commit to maintaining dollar settlement for a large share of its trade, reinforcing the dollar’s network effect in global commerce. And the U.S. should get assurances that China’s pilot digital currency, e-CNY, is interoperable with U.S.-issued digital assets—sovereign or private.

An agreement must also limit China’s participation in initiatives that serve to undermine the dollar, such as the new Brics reserve currency, using bilateral swap lines to bypass the dollar, and settling oil trades in yuan. A U.S.-China deal should explicitly reaffirm dollar settlement for energy imports, particularly oil and liquid natural gas.

The U.S. should introduce a 50- or 100-year Treasury bond, backed by anchor investors like China. Initially targeting $500 billion, extending U.S. debt maturities would stabilize capital formation and deepen alignment between U.S. and foreign interests. In financial markets, such instruments are akin to permanent equity. Trump could rightfully present it as a high-impact investment in the U.S., alongside other deals recently struck with businesses and sovereigns.

Finally, U.S. firms still face barriers in Chinese banking, asset management, and insurance. Tariff relief should require enforceable rights for U.S. firms to operate independently and without barriers in China, to promote U.S. financial standards abroad and deepen dollar-linked activity.

Bessent is the man to make this all happen. Global economic stability is at stake.

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