The Bretton Woods Agreement was launched in 1944 at a conference of all allied nations of the Second World War. It took place in Bretton Woods, New Hampshire. As part of the agreement, countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar. Get first-class financial training with the training program for certified financial analysts cfI onlineFMVA® CertificationJoin 350,600 Students working for companies like Amazon, J.P. Morgan and Ferrari! The Bretton Woods Accords were signed between the world powers in July 1944 at Bretton Woods, New Hampshire, USA. It created the International Monetary Fund (IMF) to deal with external surpluses and deficits in its member states and the International Bank for Reconstruction and Development was created for post-reconstruction financing. The security of money by the gold standard began to become a serious problem in the late 1960s. In 1971, the problem was so serious that U.S. President Richard Nixon announced that the possibility of converting the dollar to gold was “temporarily” suspended. The stage was inevitably the last straw for the system and the agreement that sketched it.
Despite the disintegration, the Bretton Woods Summit and the agreement are responsible for a number of particularly important aspects in the financial world. First, the creation of the IMF and the World Bank. To date, these two institutions are of paramount importance to the global economy. The agreement created the World Bank and the International Monetary Fund (IMF), U.S.-backed organizations, to oversee the new system. Before Bretton Woods, most countries followed the gold standard. This meant that each country guaranteed that it would use its currency for its gold value. After Bretton Woods, each member agreed to exchange their currency for the U.S. dollar and not for gold. The Bretton Woods Agreement of 1944 introduced a new global monetary system. It replaced the gold standard with the U.S. dollar as the global currency.
It thus established America as a dominant power in the global economy. After the agreement was signed, America was the only country capable of printing dollars. The World Bank was not (and is) not the central bank of the world. At the time of the Bretton Woods agreement, the World Bank was created to lend to European countries devastated by the Second World War. The World Bank`s focus has shifted to lending to economic development projects in emerging countries. The Bretton Woods Agreement was launched in 1944 at a conference of all allied nations of the Second World War.