Guest Pnekf (Military Nursing)

The Bretton Woods Agreement refers to an international monetary system established in July 1944, when delegates from 44 countries met in Bretton Woods, New Hampshire, USA. The world had just witnessed the devastating effects of the Great Depression and World War II, and nations wanted a stable financial framework to rebuild economies and prevent future crises. Key features of the agreement: 1. Fixed Exchange Rate System: - Currencies were tied to the US dollar. - The US dollar itself was convertible into gold at a fixed rate ($35 per ounce). - This created stability in international trade. 2. Creation of Global Institutions: - International Monetary Fund (IMF): To oversee exchange rates, provide short-term financial support to countries, and ensure stability. - World Bank (then called IBRD): To provide long-term loans for reconstruction and development projects. 3. US Dollar Dominance: - The dollar became the world’s primary reserve currency, giving the US significant influence in global finance. However, by the early 1970s, the system collapsed because: - The US was printing more dollars than it had gold reserves. - Other countries lost trust in the dollar’s gold convertibility. - In 1971, President Richard Nixon ended the dollar’s link to gold (known as the “Nixon Shock”), effectively bringing the Bretton Woods system to an end. Significance today: The IMF and World Bank still function as important international institutions. The Bretton Woods Agreement laid the foundation for modern global trade and finance, shaping how economies interact even today. In simple terms, the Bretton Woods Agreement was an effort to bring order and stability to the world’s economy after WWII by creating fixed exchange rates and global financial institutions.