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Bretton Woods Agreement
Definition
The Bretton Woods Agreement is a system of monetary relations that puts the US dollar in place of a single measure of international currency settlement and storage of reserves.
In July 1944, in the American city of Bretton Woods, the UN monetary and financial conference was held - a three-week meeting of delegates from 44 countries participating in the anti-Hitler coalition. As a result, agreements were signed, which are called the Bretton Woods agreements.
The main result of the agreements was the decision that only one currency will be pegged to gold as a specific standard and will be used in calculations by all participating countries. The official rate was: $ 35 per troy ounce of gold.
Objectives
The agreement had three main goals:
- Creating a balance in the international currency exchange system.
- Restoring international free trade.
- Creation of state reserves that can be used to overcome economic crises.
The end of the Bretton Woods agreements came in 1976, when the Jamaican monetary system was adopted, which is still relevant today. Exchange rates were floating and were no longer pegged to gold.
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