Brettenwood Agreement

The Bretton Woods Agreement was launched in 1944 at a conference of all allied nations of the Second World War. It took place in Bretton Woods, New Hampshire. During the Bretton Woods era, the global economy grew rapidly. Keynesian economic policy has allowed governments to mitigate economic fluctuations and recessions have been generally weak. However, tensions began to manifest in the 1960s. Persistent, albeit low, global inflation has made the price of gold too low in real terms. A chronic U.S. trade deficit drained U.S. gold reserves, but the idea of devaluing the dollar against gold was strongly opposed. In any event, this would have required an agreement between the surplus countries in order to increase their exchange rates against the dollar in order to obtain the necessary adjustment.

Meanwhile, the pace of economic growth has meant that the level of international reserves has generally become insufficient; The invention of the “Special Drawing Right” (SDR)[1] did not solve this problem. While capital controls had not yet been carried out, they were significantly lower in the late 1960s than in the early 1950s, increasing the prospects for capital flight or speculation against currencies deemed weak. The Bretton Woods countries have decided not to give the IMF the power of a global central bank. Instead, they agreed to contribute to a solid pool of national currencies and gold, which would be held by the IMF. Each member country of the Bretton Woods system then had the right to borrow as part of its dues, which it needed. The IMF was also responsible for implementing the Bretton Woods agreement. The United States has put in place the European Economic Recovery Plan (Marshall Plan) to provide significant financial and economic assistance to the reconstruction of Europe, mainly through subsidies rather than loans. The member countries of the Soviet bloc, for example. B Poland, were invited to receive the subsidies, but obtained a favorable 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: “Preparations for the rebuilding of the international economic system during World War II were still angry, 730 delegates from the 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, USA, for the United Nations Monetary and Financial Conference. , also known as the Bretton Woods Conference. Delegates deliberated from July 1 to 22, 1944 and signed the Bretton Woods Agreement on the last day. Through the establishment of a system of rules, institutions and procedures for regulating the international monetary system, these agreements created the IMF and the International Bank for Reconstruction and Development (IBRD), now part of the World Bank Group. The United States, which controlled two-thirds of the world`s gold, insisted that the Bretton Woods system was based on both gold and the U.S. dollar. Soviet representatives attended the conference, but then refused to ratify the final agreements and claimed that the institutions they had created were “branches of Wall Street.” [1] These organizations were commissioned in 1945 after the agreement was ratified by a sufficient number of countries.

In 1944, at the end of World War II, representatives from 44 countries met at Bretton Woods in the White Mountain National Forest of the United States in New Hampshire. Led by British economist John Maynard Keynes and Harry Dexter White of the U.S. Treasury, they drew up an agreement that hoped it would be the basis for a new financial order. The Bretton Woods system has given rise to strong exchange rates at the international level, as well as at the International Monetary Fund (IMF) and the World Bank.

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