Bretton Woods Agreement


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Related to Bretton Woods Agreement: gold standard, Bretton Woods conference, Smithsonian Agreement

Bretton Woods Agreement

An agreement signed by the original United Nations members in 1944 that established the International Monetary Fund (IMF) and the post-World War II international monetary system of fixed exchange rates.

Bretton Woods Agreement

An international agreement on monetary and currency policy for the period following World War II. Initially crafted in 1944 while the war was ongoing, it came into effect the following year. Among other things, the Bretton Woods Agreement created the International Monetary Fund and the International Bank for Reconstruction and Development. The latter organization was created to finance post-war reconstruction, while the IMF was intended to stabilize exchanges rates between currencies and to serve as a country's lender of last resort.

A key component of the Bretton Woods Agreement was the requirement that all countries peg their currencies to a certain amount of gold. In practice, most currencies were pegged to the U.S. dollar, which was itself pegged to gold. This helped the IMF accomplish its stated goals to stabilize currencies that had experienced a large amount of wartime inflation. The Agreement worked relatively well until the United States unilaterally depegged from gold in 1971. See also: Keynesian economics, Nixon shock.
References in periodicals archive ?
During the negotiations leading up to the 1944 Bretton Woods agreements, Latin American policymakers supported and reinforced the US plans, as did representatives of China, India, and Eastern Europe.
Upon reviewing draft plans for the Bretton Woods Agreement, the renowned Princeton University trade and monetary theorist Frank Graham predicted (in the foregoing quotation) that international finance would not become the 'handmaiden of international trade'; it would more likely 'set up on its own account'.
Stockman shows that even the famous "defender" of capitalism, Milton Friedman, became an agent of its destruction by advocating the end of the Bretton Woods agreement.
Under the Bretton Woods agreement, the dollar would remain on an international gold-exchange standard (meaning that dollars could be redeemed for gold, but only by international traders), and other currencies would be convertible into the dollar.
The Bretton Woods Agreement of 1944, which laid the institutional foundation for the post-war World War II economy, was made possible because the United States and Britain called the shots.
The Bretton Woods agreement of July 1944 established the rules for multilateral negotiations over economic policy, and created such institutions as the International Monetary Fund and the International Bank for Reconstruction and Development.
My guess is that the new order will look multi-polar from the outside; but, to the insiders of the Group of Seven (G-7) powers, it will remain unipolar - i.e., led by the G-7 where the US will be more equal than its six partners - conveniently called 'Bretton Woods-II', a revised version of the 1944 Bretton Woods Agreement heralded by French President Nicolas Sarkozy in late October 2008.
A transitional phase followed the annulment of the Bretton Woods Agreement, and a floating exchange rate of currency was subsequently adopted instead of the previous system mandating gold coverage for currencies.
While the US is reluctant to outline an ambitious agenda for the G20 summit, Europeans and French diplomats have been pushing for a new Bretton Woods agreement', following the model of agreements that governed global financial rules after World War II.
He was referring to the Inter- national Monetary Fund and the World Bank, created by the 1944 Bretton Woods agreement, and bodies later created to regulate global trade.
The United States and other large industrial countries had fixed their exchange rates under the Bretton Woods Agreement Act in 1945, but the system did not become fully functional until the end of 1958.
In the first quarter-century of the post-World War II era, trade was held back by the constraints of fixed exchange rates imposed by the Bretton Woods Agreement. Trade's share of total GDP was largely unchanged from the mid-1940s up to the early 1970s.