International Clearing Union

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The International Clearing Union (ICU) was one of the institutions proposed to be set up at the 1944 United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire by British economist John Maynard Keynes. Its aim was to have been regulation of currency exchange and the issue of a currency of last resort. These roles were eventually taken by the International Monetary Fund (IMF). George Monbiot, a contemporary critic of the IMF, has argued that the ICU's proposed mechanisms would have given greater weight to the less developed countries, which were not then as heavily involved in international trade as they are now.

The International Clearing Union (ICU) would be a global bank whose job would be to regulate trade between nations. The ICU would make all international trade be done in its own currency called a bancor. The bancor would have a fixed exchange rate with other national currencies, and would be used to measure the balance of trade between nations. Every good exported would add bancors to a countries account, every good imported would subtract them. Each nation would then be given large incentives to keep their bancor balance within a very close percentage to zero. If a nation had too high a bancor surplus the ICU would take a percentage of that surplus and put it into the Clearing Union's Reserve Fund. This taking of surplus bancors would encourage nations with surpluses to buy other nations exports, so they maintain a zero trade sum. Nations that imported more than they exported would have their currency deflated to encourage other nations to buy their products, and make imports more expensive.