Bretton Woods system
From Simple English Wikipedia, the free encyclopedia
The Bretton Woods system meant that each country had to adopt a monetary policy that kept the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold.
For that purpose the International Monetary Fund (IMF) was created to fight against temporary imbalances of payments. The Bretton Woods system was the first monetary order that organized monetary relations among independent nation-states.
It established the rules for commercial and financial relations among the world's major industrial states.
To rebuild the international economic system already during World War II 730 delegates from all 44 Allies of World War II came to Bretton Woods, New Hampshire for the United Nations Monetary and Financial Conference. The delegates discussed and then signed the Bretton Woods Agreements during the first three weeks of July 1944.
Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Bank for Reconstruction and Development (IBRD) (now one of five institutions in the World Bank Group) and the International Monetary Fund (IMF). These organizations became active in 1946 after a sufficient number of countries had ratified the agreement.
Until the early 1970s, the Bretton Woods system was effective in controlling conflict and in achieving the common goals of the leading states that had created it, especially the United States. In the face of increasing strain, the system collapsed in 1971, following the United States' suspension of convertibility from dollars to gold.
[edit] External links
- The Gold Battles Within the Cold War (PDF) by Francis J. Gavin (2002)
- International Financial Stability (PDF) by Michael Dooley, PhD, David Folkerts-Landau and Peter Garber, Deutsche Bank (October 2005)
- "Bretton Woods System", prepared for the Routledge Encyclopedia of International Political Economy by Dr.B.Cohen
- Bretton Woods Agreement by Addison Wiggin Author of Empire of Debt
