science

International Clearing Union

International Clearing Union is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand International Clearing Union rather than just read about it. In short: 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, in the United States, by British economist John Maynard Keynes. Its aim was to establish regulation of currency exchange, a role eventually taken by the International Monetary Fund (IMF).

Key takeaways

International Clearing Union belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect International Clearing Union to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of International Clearing Union from memory before moving on to harder problems.

Reference excerpt

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, in the United States, by British economist John Maynard Keynes. Its aim was to establish regulation of currency exchange, a role eventually taken by the International Monetary Fund (IMF). The International Clearing Union (ICU) would be a global bank whose role would be the clearance of trade between nations, similar to a trade exchange with every country as a member. All international trade would be denominated in a special unit of account, the proposed bancor. The bancor was to have had a fixed exchange rate with national currencies, and would have been used to measure the balance of trade between nations. Goods exported would add bancors to a country's account, while goods imported would subtract them. Each nation would be incentivized to keep their bancor balance close to zero by one of two methods: in the case of an excessively positive bancor balance, part of their surplus would be taken and applied to the Clearing Union's Reserve Fund. In the case of an excessively negative bancor balance, their currency’s exchange rate would be lowered, making imports more expensive and exports cheaper. In this way nations would be encouraged to buy other nations’ products. Gold and national currency would no longer be used in international trade and no longer move between countries. The ICU is similar to Silvio Gesell's proposal for an International Valuta Association, and the latter idea may have strongly influenced the former.

See also Asian Clearing Union Bancor Bank for International Settlements European Payments Union E. F. Schumacher

References

External links International Clearing Union, House of Lords Hansard, 18 May 1943 vol. 127 cc520-64. George Monbiot on an International Clearing Union

Worked examples

Example 1 — a first encounter with International Clearing Union

Start with the simplest possible case. Write down what International Clearing Union claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to International Clearing Union before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about International Clearing Union ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of International Clearing Union

In research: International Clearing Union appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses International Clearing Union in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: International Clearing Union is common in secondary-school and first-year university syllabi. It links to neighbouring topics Gold standard, International Monetary Fund, International economic organizations, so understanding it makes those chapters shorter.
In everyday life: Look for International Clearing Union outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study International Clearing Union in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what International Clearing Union means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain International Clearing Union out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is International Clearing Union in simple terms?

Why does International Clearing Union matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study International Clearing Union?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on International Clearing Union.