The Bretton Woods agreement signed in July 1944 marked a major turning point in the Second World War International Economic Relations. The meeting was convened at the Washington Mountain Hotel in Bretton Woods, Hampshire, and convened representatives from 44 allies to establish a new framework for global economic cooperation and stability.
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Historical background
The damage caused by World War II has wasteed many economies. Therefore, it is in the context of this kind of war war that the Bretton Woods Conference convened a reasonable international monetary system to prevent the competitive devaluation of the economic vortex and the trade protectionist policy, which caused the Great Depression to the Great Depression Essence The meeting was also influenced by an early agreement such as an agreement, such as the Atlantic Charter, which outlined the principles of post -war cooperation and economic order.
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Key terms of the agreement
The Bretton Woods agreement establishes a fixed exchange interest rate system. All currencies are associated with the US dollar. It is converted to gold with a fixed interest rate of $ 35 per ounce. This aims to allow international trade stability by reducing changes in monetary value. It is also encouraged to determine that its currency’s parity is within 1 % of the original interest rate relative to the US dollar.
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Bretton Woods conference replaced the creation of two new institutions:
- International Monetary Fund (IMF): If the state causes difficulties in losses, the agency will be charged to ensure the role of exchange rate and short -term financial resources. IMF is mainly committed to international currency cooperation.
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- International Reconstruction and Development Bank (IBRD): It is part of the World Bank Group today. The new institution was established for post -war reconstruction and the development of member states.
Economic consequences
Bretton Woods System has promoted an environment that is conducive to international trade and investment. Establish a stable currency framework and encourage countries to engage in trade without having to worry about sudden currency depreciation. This stability is essential for rebuilding the economy of war and promoting global economic growth.
The United States is currently the leading economic force, accounting for two -thirds of the world’s gold reserves. The influence of the United States has established rules and institutions in Bretton Woods, and some critics, especially the Soviet critics, regarded these institutions as subsidiaries of US economic hegemony.
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Challenge and collapse
In the 1960s and early 1970s, the Bretton Woods system was proven to be fragile. It has suffered a high inflation rate in the United States and increased the balance of insufficient payment, which forced the US dollar’s convertibility to turn gold to rupture points. In August 1971, President Richard Nixon announced the suspension of US dollar convertibility, marking the end of the Bretton Woods System. By 1973, most major currencies turned to floating exchange rates.
heritage
The Bretton Woods agreement lays the foundation of modern international financial systems and institutions. Its emphasis on cooperation and stability is the guidance of global economic governance today. The International Monetary Fund and the World Bank are still part of the global financial challenges and promote economic development.
Therefore, this will summarize the agreement of Bretton Woods, which is a very important moment for the post -war economic relationship: this framework finally stimulates recovery and growth, and at the same time, it is international cooperation in the dynamics of changing power. Complexity has set an example.
Source: https://dinhtienhoang.edu.vn
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