The 1980s saw the first widespread global sovereign debt crisis. Understanding the roots of this crisis requires examining how the economies which entered into this crisis had developed.
After World War 2, the upheaval which the world had seen since 1914 meant that proposals for a more stable international economic order won the day. The Bretton Woods Institutions were established in 1944, with the International Monetary Fund intended to maintain currency stability and act as a lender of last resort when needed, and the World Bank established to provide development loans to lower-income countries. An agreement was also reached to link the value of the US dollar to the price of gold. Along with a number of other political and economic developments, these measures successfully ensured that the period from 1945 to 1970 saw unprecedented increases in quality of life, workers rights, and social services.
