Agreement Of Bretton Woods

During the Bretton Woods era, the global economy grew rapidly. Keynesian economic policy has allowed governments to mitigate economic fluctuations and recessions have been generally weak. However, tensions began to manifest in the 1960s. Persistent, albeit low, global inflation has made the price of gold too low in real terms. A chronic U.S. trade deficit drained U.S. gold reserves, but the idea of devaluing the dollar against gold was strongly opposed. In any event, this would have required an agreement between the surplus countries in order to increase their exchange rates against the dollar in order to obtain the necessary adjustment. Meanwhile, the pace of economic growth has meant that the level of international reserves has generally become insufficient; The invention of the “Special Drawing Right” (SDR)[1] did not solve this problem. While capital controls had not yet been carried out, they were significantly lower in the late 1960s than in the early 1950s, increasing the prospects for capital flight or speculation against currencies deemed weak. This useful collection of basic documents and essays marks the 75th anniversary of the Bretton Woods Agreement of July 20, 1944. The Bretton Woods system is mainly identified by the monetary agreement that established the International Monetary Fund (IMF) to help countries maintain fixed exchange rates.

In fact, the IMF was part of a group of interdependent institutions, including the International Bank for Reconstruction and Development (IBRD), the precursor to the World Bank, and, three years later, the General Agreement on Tariffs and Trade, a precursor to the World Trade Organization, much later. The United States launched the Marshall Plan for the economic recovery of the European Union in order to provide significant financial and economic assistance to the reconstruction of Europe, largely through subsidies rather than loans. The member countries of the Soviet bloc, for example. B Poland, were invited to receive the subsidies, but obtained a favorable agreement with the COMECON of the Soviet Union. [31] In a speech at Harvard University on June 5, 1947, U.S. Secretary of State George Marshall stated that by studying the promotion of an international career in finance, experts are learning about the effects of international agreements such as Bretton Woods and the institutions they have created. Developing a strong international financial strategy means anticipating the impact of central bank announcements and actions, managed in the same way by national governments and international bodies. Harold James`s elegant essay is the book`s most thoughtful. The Bretton Woods agreement, he writes, was possible because it isolated the monetary settlement of the interminable trade disputes that trade wars lasted for 70 years. The agreement did not promote the discipline of the Federal Reserve or the U.S.