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 that would 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. The Bretton Woods Agreement was reached in 1944 at a summit in New Hampshire, USA, at a site of the same name. The agreement was reached by 730 delegates, representing the 44 allied nations that attended the summit. In simple terms, the gold standard is a system used to understand the value of money, and this means that a currency is compared to how much it is worth in gold and at what rate it can be exchanged for gold. to create a fixed exchange rate. The dates are those on which the tariff was introduced; “*” suggests a variable interest rate provided by the IMF[51] [not precise enough to verify] But the United States, as a probably creditor nation eager to assume the role of world economic power, used White`s plan, but targeted many of Keynes` concerns. White saw a role for global interventions in an imbalance only when it was caused by currency speculation. . The proximate cause of the global depression was a structurally flawed and mismanaged international gold standard.
. For a variety of reasons, including the Federal Reserve`s desire to contain the U.S. stock market boom, monetary policy in several major countries contracted in the late 1920s – a contraction transmitted by the gold standard around the world. What was initially a light deflationary process began to snowball when the banking and monetary crisis of 1931 triggered an international “gold rush.” The sterilization of gold inflows by surplus countries [the United States and France], the substitution of foreign exchange reserves by gold, and rushes to commercial banks led to an increase in the gold support of the currency and, consequently, to a sharp involuntary decline in the national money supply. Monetary contractions, in turn, were strongly linked to lower prices, output and employment. Effective international cooperation could, in principle, have enabled global monetary expansion despite the constraints of the gold standard, but disputes over reparations and war debts during World War I, as well as the insularity and inexperience of the Federal Reserve, prevented this outcome, among other things. As a result, individual countries could only escape the deflationary vortex by unilaterally abandoning the gold standard and restoring domestic monetary stability, a process that dragged on and without coordination until the France and other gold-block countries finally left gold in 1936. – Great Depression, B. Bernanke Financial crises during the term of US President Richard Nixon led to the end of the Bretton Woods system. During these years, the amount of dollars held abroad exceeded the value of gold reserves held by the United States at Fort Knox and elsewhere. This undermined the premise of the deal, which was that the US could still hedge its dollars with its gold equivalent.
The IMF has tried to provide for occasional discontinuous exchange rate adjustments (changes in a member`s nominal value) through international agreements. Member States were allowed to adjust their exchange rates by 1%. This tended to restore the balance of their trade by increasing their exports and reducing their imports. This would only be allowed if there was a fundamental imbalance. A decrease in the value of a country`s currency was called a devaluation, while an increase in the value of the country`s currency was called a revaluation. The support of money by the gold standard became a serious problem in the late 1960s. In 1971, the problem was so serious that US President Richard Nixon announced that the ability to convert the dollar into gold would be “temporarily” suspended. This decision was inevitably the straw that broke the camel`s back for the system and the agreement it described. Chairs of the 44 country delegations to Bretton Woods Conference.By July 22, 1944, delegates signed the Final Act of the United Nations Monetary and Financial Conference, which contained charters outlining the objectives and mechanisms of the IMF and IBRD, although many decisions have not yet been taken. The Articles of The IBRD Agreement were ratified on December 27, 1945, when representatives of twenty-one countries met in Washington, D.C., to become the first members of the bank. The Bretton Woods rules, set out in the Articles of Agreement of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), provided for a system of fixed exchange rates.
The rules also aimed to promote an open system by requiring members to convert their respective currencies into other currencies and to trade freely. After the end of World War II, the United States had $26 billion in gold reserves, out of an estimated total of $40 billion (about 65 percent). As world trade grew rapidly in the 1950s, the size of the gold base increased by only a few percentage points. In 1950, the U.S. balance of payments fluctuated in the negative. The first U.S. response to the crisis came in the late 1950s, when the Eisenhower administration imposed import quotas on oil and other restrictions on trade exits. .