Bretton Woods Agreement Broken
They came up with a solution, and that is one of The main motivations of Bretton Woods, which is: okay, if we don`t trust the markets and if we don`t trust governments, we have to come up with an agreement that gets everyone to stick to a plan that we believe is the plan that would make economic growth more successful. And that led to the system itself, because the attachment of currencies to the U.S. dollar would prevent any government from wilful devaluations. The Bretton Woods countries have decided not to give the IMF the power of a global central bank. Instead, they agreed to contribute to a solid pool of national currencies and gold, which would be held by the IMF. Each member country of the Bretton Woods system then had the right to borrow as part of its dues, which it needed. The IMF was also responsible for implementing the Bretton Woods agreement. Smith: So, Paulina, tell me why this agreement ended? What were the factors that ultimately caused it to fail? Smith: So this is the Bretton Woods agreement. And you`ve been studying it recently – A new Bretton Woods agreement would symbolize global cooperation at a time when the global economy has suffered its biggest blow since the Great Depression. While caution is required in historical comparisons, the ability of nations to avoid economic collapse could stem the tide of populism and reduce the risk of conflict. Smith: – even from the Bretton Woods agreement.
I was curious if you had any thoughts about the legacy of these organizations and perhaps even how they evolved from what was their original intent under Bretton Woods? And the fact that the U.S. dollar was tied to gold also anchored the entire economy. It was a kind of application possibility that no one deviated from the agreement in one way or another. A devastated Britain had little choice. Two world wars had destroyed the country`s main industries, which paid for the import of half of the food and almost all of its raw materials except coal. The British had no choice but to ask for help. It was only when the United States signed a 4.4 billion pound British aid agreement on 6 December 1945 that the British Parliament ratified the Bretton Woods Agreements (which took place later in December 1945).  Smith: What is the Bretton Woods agreement and what did it lead to? It turned out that Keynes insisted on a reserve currency called “bancor.” That`s ideally what he wanted. But we know that what happened in the end was that the U.S. dollar was finally chosen as a reserve currency.
So I think (and this is my interpretation of reading all the agreements and documents signed at the time) that Britain has not been able to have much bargaining power. They were in a position where they needed the means to rebuild, and they could not actually carry their weight in the agreement. Smith: Based on the research you did, did you find that she felt there were obvious winners or losers in this agreement? If so, why? Global cooperation between governments will be needed to accelerate recovery and ensure that excessive competition is not an obstacle.