Bretton Woods Agreement


Also found in: Dictionary, Encyclopedia.
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 ?
In celebrating the conclusion of the 1944 Bretton Woods agreement, which created the post-war world's financial architecture, US Treasury Secretary Henry Morgenthau's used his closing address to the conference to call for a more effective banking system that provided more money on cheaper terms: "The effect would be C*to drive only the usurious money lenders from the temple of international finance.
One rather misleading short-hand for this search is to refer back to the Bretton Woods agreement, which managed the post-war global economy for decades till it ran out of steam.
But all signatories to the Bretton Woods Agreement were required to subscribe to the IMF, and would reckon their contributions in terms of SDRs (Special Drawing Rights), a sort of proto-international currency.
The Bretton Woods Agreement takes its name from the international conference held in the New Hampshire town of that name in July 1944.
In the 1960s, variations in the exchange rate were infrequent because exchange rates were, for the most part, fixed under the Bretton Woods agreement.
After the devastation of World War II, the Bretton Woods agreement was created to regulate the international monetary system.
None of this could have happened but for the infamous Bretton Woods agreement of 1944, whereby other countries agreed to accept dollars as a reserve currency equal to gold.
Also created as part of the Bretton Woods agreement was the World Bank, a labyrinth of regional lending banks, a dispute settlement agency, a finance corporation, a pair of global development funds, and various subsidiary organizations.
In a draft memo that would be the precursor to the Bretton Woods agreement for international monetary cooperation, White (1942: 46) argued that prosperity should be built on a solid monetary foundation of stable exchange rates:
e Bretton Woods agreement after the war had been totally abandoned in favour of a free for all and much toxic practice.
In fact, the very launch of such an institution will be interpreted as a symbolic challenge to the existing global monetary system set up under the Bretton Woods Agreement.
7) By the early 1940s, Chiang's government found an even better opportunity for promoting Sun's proposal when it was invited by the US government to participate in the planning for the postwar international financial order that generated the 1944 Bretton Woods agreement.