Bretton Woods Agreement Is Related To

13. September 2021 Aus Von ROCT

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, which will be held by the IMF. Each member of the Bretton Woods system then had the right to borrow what it needed as part of its contributions. The IMF was also responsible for the implementation of the Bretton Woods agreement. Two world wars had destroyed the country`s main industries, which paid to import half of the country`s food and almost all its raw materials except coal. The British had no choice but to ask for help. It was not until the United States signed an agreement on December 6, 1945, to provide $4.4 billion in aid to Britain that the British Parliament ratified the Bretton Woods Agreements (which was done later in December 1945). [24] These two financial institutions were instrumental in believing in the Bretton Woods agreement and, even after the agreement no longer existed, these two institutions were not dissolved. A devastated Britain had little choice. Two world wars had destroyed the country`s main industries, which paid to import half of the country`s food and almost all its raw materials except coal. The British had no choice but to ask for help.

In 1945, the United States accepted a $3.8 billion loan. In exchange, tired British officials promised to negotiate the deal. It is important to note that the implementation of many contents of the agreement was anchored by the IMF, if it did not exist, the agreement would not have seen the light of day. 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. Another objective of this agreement was to create institutions that would finance the various national development projects of the Member States and that would also conduct an international monetary policy. The Bretton Woods planners established a system of rules, institutions and procedures to regulate the international monetary system and created the International Bank for Reconstruction and Development (IBRD) (now one of the five institutions of the World Bank Group) and the International Monetary Fund (IMF). These organizations began their work in 1946, after a sufficient number of countries had ratified the agreement. The Bretton Woods system is a set of uniform rules and guidelines that provide the framework for the establishment of fixed international exchange rates. Essentially, the agreement invited the newly created IMF to set the fixed exchange rate of the world`s currencies.

Each country represented took responsibility for maintaining the exchange rate, with incredibly narrow margins above and below. Countries that find it difficult to stay within the fixed exchange rate window could ask the IMF for an adjustment in interest rates, for which all allied countries would then be responsible. The price to pay for this position – especially in the cold war climate – was the militarization of the US economy, which US President Dwight D. Eisenhower called the „arms industry“ and the „military-industrial complex,“ and the idea that the United States should play a protective role in what was called the „free world.“ Returning to the origins of the Cold War, Harry Dexter White, in a document written by Harry Dexter White at the time of his death, deplored the „tensions between some great powers“ that had „almost catastrophic“ consequences, including an „acute lack of confidence in persistent political stability and the paralyzing fear of a war of a magnitude, which, in its destructive possibilities, is unprecedented and almost unimaginable.“ 730 delegates from the 44 Allied nations were preparing to rebuild the international economic system while World War II was still raging, and gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, UNITED STATES, for the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference. . . .