24-13. In 1985, a new attempt was made to influence the value of major currencies. What was the name of the agreement? The Bretton Woods Agreement remains an important event in the history of global finance. The two Bretton Woods institutions it established at the International Monetary Fund and the World Bank played an important role in rebuilding Europe after World War II. Subsequently, both institutions maintained their founding goals while building on today`s global government interests. About 730 delegates from 44 countries met in Bretton Woods in July 1944 with the main objective of creating an effective exchange rate system, preventing competitive currency devaluations and promoting international economic growth. The Bretton Woods agreement and system have been at the heart of these objectives. The Bretton Woods Agreement also created two important organizations: the International Monetary Fund (IMF) and the World Bank. While the Bretton Woods system was dismantled in the 1970s, the IMF and the World Bank remained strong pillars for international currency exchange. Under the Bretton Woods system, gold was the basis of the U.S. dollar and other currencies were tied to the value of the U.S. dollar. The Bretton Woods system came to an end in the early 1970s, when President Richard M.
Nixon announced that the United States would no longer trade gold for U.S. currency. Gold has often been physically sent abroad to pay for current account imbalances that have affected the real domestic money supply. What`s that? The international monetary fund`s missions include all… Although the Bretton Woods conference itself took place for only three weeks, preparations had been underway for several years. The main creators of the Bretton Woods system were the famous British economist John Maynard Keynes and the American chief economist of the US Treasury Harry Dexter White. Keynes` hope was to create a powerful global central bank called the Clearing Union, and a new international reserve currency called Bancor. White`s plan provided for a more modest credit fund and a greater role for the U.S. dollar, instead of creating a new currency. In the end, the adopted plan took ideas of both and tended more to White`s plan. In setting exchange rates, the Bretton Woods system was hoping for a 24-6. The parity system put in place following the Bretton Woods conference set the exchange rates of member countries in relation to 24-7.
In cases where the price of gold has risen, the United States could defend the gold price at $35 per ounce from 24-3. The unit of account used by the Bank of International Settlement is that all countries in the Bretton Woods system have agreed to make a firm commitment to the U.S. dollar, with diversions of only 1%. Countries were required to monitor and maintain their monetary commitments, which they achieved primarily by using their currency to buy or sell U.S. dollars as needed. The Bretton Woods system has therefore minimized the volatility of international exchange rates that has helped international trade relations. Greater stability in foreign exchange exchange has also been a factor in the success of the World Bank`s support of international loans and subsidies. 24-10. In the view of many, the collapse of the Bretton Woods system was the result of „; OpenResponse (response); –> multiple-choice quiz 24-1.
Which of the following reasons does not explain the flood of new international cooperation after the Second World War? one. The recession that hit most industrialized countries at the time. B. Problems with the gold standard. c. Politics of beggars and neighbours.