As part of the agreement, countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar. If a country`s monetary value became too low against the dollar, the bank would buy back its currency on the foreign exchange markets. 730 delegates from the 44 Allied United 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 debated from 1 to 22 July 1944 and signed the Bretton Woods Agreement on its final day. The creation of a system of rules, institutions, and procedures for regulating the international monetary system 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 be based on both gold and the U.S. dollar. Soviet representatives attended the conference, but later refused to ratify the final agreements and lamented that the institutions they created were “branches of Wall Street.” [1] These organizations began their work in 1945, after a sufficient number of countries had ratified the agreement. The agreement created the World Bank and the International Monetary Fund (IMF), U.S.-backed organizations to oversee the new system. 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 capable of printing dollars. Below is a succinct summary of why the world`s economies became part of the Bretton Woods system, how the system worked, why it failed, and had the impact of the agreement on the development of the international monetary system. Modern economists can gain insights and insights by revealing the past of their profession. The Bretton Woods system was implemented as a more stable substitute for the gold standard, according to which all currencies were convertible into gold. According to the new agreement, the dollar was the norm for international transactions, the value of which was set at 1/35 of an ounce of gold. The fact that the United States held a large part of the world`s gold reserves allowed the dollar to assume its new role as the standard currency on which stock markets were based. 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 and not loans.
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