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stories of war and finance

by gea gea derek (2018-07-31)

Toward the end of World War II, the countries joined in the Allied alliance mas joni felt that they needed to build a monetary system to fill the void of abandonment of the gold standard system. In July 1944, more than 700 Allied representatives met in Bretton Woods, New Hampshire, USA. The goal is to come up with a deal we know by the name of Bretton Woods System as a form of international monetary management.

In short, Bretton Woods establishes the following:

Is a method with a fixed foreign exchange rate
The US dollar replaces the role of the gold standard into the main reserve currency
Establishment of three international bodies to monitor global economic activity: the International Monetary Fund (IMF), the International Bank for Reconstruction and Development, and the General Agreement on Tariffs and Trade (GATT).
The main feature of the Bretton Woods system is USD replacing gold as the main standard exchange rate for world currencies. Furthermore, USD us dollar becomes the only eye in the world that will be protected by gold reserves. This is what later became the main reason for the failure of the Bretton Woods system.