Bretton Woods Agreement 1945

The Bretton Woods Agreement of 1944 established a new global monetary system. It replaced the gold standard with the US dollar as the world currency. In this way, it established America as a dominant power in the global economy. After the agreement was signed, America was the only country that could print dollars. Financial crises during the term of US President Richard Nixon led to the end of the Bretton Woods system. During these years, the amount of dollars held abroad exceeded the value of gold reserves held by the United States, at Fort Knox and elsewhere. This undermined the premise of the deal, which is that the US could still get its dollars back with its gold counter-value. The Bretton Woods Agreement was created in 1944 at a conference of all allied nations of World War II. It took place in Bretton Woods, New Hampshire.

The United States launched the European Economic Recovery Plan (Marshall Plan) to provide significant financial and economic assistance for the reconstruction of Europe, mainly through grants, not loans. Countries that are part of the Soviet bloc, for example. B Poland, were invited to receive the subsidies, but obtained a favourable agreement with the COMECON of the Soviet Union. [31] In a speech at Harvard University on June 5, 1947, U.S. Secretary of State George Marshall said that the agreement created the World Bank and the International Monetary Fund (IMF), U.S.-backed organizations that would oversee the new system. This facilitated the decisions of the Bretton Woods conference. Moreover, all the Bretton Woods participating Governments agreed that the monetary chaos of the interwar period had brought several valuable lessons. The Bretton Woods rules, set out in the treaty articles of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), provide for a system of fixed exchange rates.

The rules also aimed to promote an open system by requiring members to convert their respective currencies into other currencies and to free trade. The Bretton Woods countries decided not to give the IMF the power of a global central bank. Instead, they agreed to contribute to a fixed pool of national currencies and gold, which will be held by the IMF. Each member of the Bretton Woods system then had the right to borrow what it needed as part of its contributions. The IMF was also responsible for the implementation of the Bretton Woods agreement. In 1945, Roosevelt and Churchill prepared for the post-war period by negotiating appropriate areas of influence with Joseph Stalin in Canta; in the same year, Germany was divided into four occupation zones (Soviet, American, British and French). By studying an international financial career, specialists learn about the impact of international agreements such as Bretton Woods and the institutions they have created. The establishment of a sound international financial strategy implies anticipating the effects of announcements and measures taken by central banks, carried out in the same way by national governments and international bodies. Officially founded on December 27, 1945, when the 29 participating countries signed their articles of the agreement at the Bretton Woods conference, the IMF was to be the guardian of the rules and the main instrument of international public administration. The Fund began its financial operations on March 1, 1947.

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