The Bretton Woods System Essay

2050 words - 8 pages

The period referred to as the 'Golden Age' was between 1950 and 1973. There was rapid growth in the US economy during this time, the economies of Europe and Japan also had very high rates of growth. The world’s advanced countries spurred a commodities boom which benefited natural resource-rich countries such as the oil rich ones in the Middle East, as well as the industrial nations of East Asia i.e. Singapore, Thailand, China etc.

The Bretton Woods Conference, which is officially known as the United Nations Monetary and Financial Conference took place from July 1 to July 22 in 1944, in Bretton Woods, New Hampshire in the United States. It was a gathering of delegates from 44 different countries that met in order to try and formulate a series of new rules for the post-WWII international monetary system. Through this conference they hoped to be able to restructure the international finance and currency relationships and prevent the economic disaster that contributed to the Great Depression of the 1930s. The conference succeeded in achieving two major things by creating the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which are still in use today. The two people most credited with devising the plans for this Bretton Woods system are two of the most important economists of that era, the American minister of state in the U.S. treasury, Harry Dexter White, and the British economist John Maynard Keynes.

The International Monetary Fund (IMF) was officialy createed when the first 29 countries to become its members signed the Articles of Agreement. came into formal existence in December 1945, when the initial 29 countries to become members signed its Articles of Agreement. It then consequently began operating on March 1, 1947. It was established with the intention of promoting monetary cooperation between countries internationally, exchange rate stability, and to provide temporary financial assistance to other countries to in order to help ease the balance of payments adjustment. The countries that joined the IMF between 1945 and 1971 had initially agreed to keep their exchange rates at rates that could be adjusted only in instances to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement. This system prevailed until 1971, when the U.S. government suspended the convertibility of the dollar, as well as the dollar reserves held by other governments, into gold.

The International Bank for Reconstruction and Development (World Bank) is probably the world’s single most important source of financial aid for developing nations. It was one of the institutions founded in 1944 at the Bretton Woods Conference to help Europe recover from World War II. The International Bank for Reconstruction and Development (IBRD) is only one of five institutions that make up the organization known as the World Bank Group. IBRD is the part of the World Bank that works...

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