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. Under the agreement, countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar. The support of money by the gold standard became a serious problem in the late 1960s. In 1971, the problem was so serious that US President Richard Nixon announced that the possibility of converting the dollar into gold would be “temporarily” suspended. This decision was inevitably the straw that broke the camel`s back for the system and the agreement it described. Get ® world-class financial training with CFIFMVA`s Certified Financial Analyst Online Training Program, as well as more than 350,600 students working for companies like Amazon, J.P. Morgan and Ferrari are working! The Bretton Woods Agreements of 1944 established a new global monetary system. It replaced the gold standard with the United States. The dollar as a world currency. In this way, he established America as the dominant power in the global economy. After the agreement was signed, America was the only country capable of printing dollars. 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 that would be held by the IMF. Each country that is a member of the Bretton Woods system would then have the right to borrow what it needs as part of its contributions. The IMF was also responsible for the implementation of the Bretton Woods agreement. The Bretton Woods Agreement was reached in 1944 at a summit meeting in New Hampshire, USA, at a site of the same name. The agreement was reached by 730 delegates who were representatives of the 44 allied nations who attended the summit. Delegates used the gold standard as part of the agreement, in the simplest terms, the gold standard is a system used to understand the value of money, and this means that a currency is compared to how much it is worth in gold and at what rate it can be exchanged for gold. to create a fixed exchange rate. The agreement created the World Bank and the International Monetary Fund (IMF), U.S.-backed organizations to oversee the new system. The agreement also facilitated the creation of extremely important structures in the financial world: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), now known as the World Bank. .