“The Bretton Woods Agreement, signed in 1944 in Bretton Woods, New Hampshire, was a landmark international agreement that established a new system for managing the global monetary system. The agreement was negotiated between the Allied nations at the end of World War II and aimed to create a stable economic environment by ensuring a predictable exchange rate regime.
Under the Bretton Woods system, participating countries agreed to fix the value of their currencies to the U.S. dollar, which was in turn fixed to the price of gold. This created a system of fixed exchange rates that provided stability to the global economy by reducing currency volatility and making international trade and investment easier.
The agreement also created two new international institutions: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which later became the World Bank. These organizations were tasked with overseeing the global monetary system, providing financial assistance to member countries, and promoting economic development.
The Bretton Woods system remained in place until the early 1970s, when a series of economic and political factors led to its collapse. Among these factors were rising inflation in the United States, the increasing cost of the Vietnam War, and the decision by other countries to abandon their fixed exchange rates in favor of floating rates.
Overall, the Bretton Woods Agreement was a critical moment in the history of international economics and finance. It helped to promote global economic stability and facilitated the growth of international trade and investment in the postwar period. However, its collapse in the 1970s marked the beginning of a new era of currency volatility and instability that continues to shape the global economy to this day.”
Sourced from Chat GPT, assessed by Sean Lee