New Bretton Woods

Bretton Woods was a system of monetary management that laid of the rules of commercial and financial interaction between the world’s leading economies. It was a ground-breaking system that for the first time The Bretton Woods system was the first example monetary and financial rules being agreed between independent nations.

The system was agreed in July 1944 by 730 delegates from 44 nations (the allies in the second world war) who met in Bretton Woods, New Hampshire, United States. In fact the meeting’s official name was the United Nations Monetary and Financial Conference. The delegates deliberated upon and signed the Bretton Woods Agreements during the first three weeks of July 1944.

More than just a system Bretton Woods also etsablished institutions to regulate and manage international finance - the meeting gave rise to the International Bank for Reconstruction and Development (IBRD) (today part of the World Bank Group), and the International Monetary Fund (IMF).

The Bretton Woods system placed an obligation on each country to fix the value of its exchange rate in terms of gold. The IMF was created to support any imbalances in payments. Ultimately the system collapsed in 1971 when the USA suspended convertibility from dollars to gold. And that gave rise to the dollar becoming the reserve currency for the nations that had signed up to Bretton Woods.