the bretton woods system presentation
TRANSCRIPT
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THE BRETTON WOODS SYSTEM
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Introduction
Harry Dexter White
John Maynard Keynes
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Events leading up to the conference
• Restrictive market practices which caused the
devaluation, deflation and depression that
defined the economy of the 1930s.
• World War II
• The gold standard
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• Intended to govern currency regulations and
establish legal obligations (through the IMF)
• Set a standard for exchange rates
• Establish international monetary cooperation
• Money pool from which member nations can
borrow funds
Goals of the Conference
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Outcome(formally established December 27, 1945)
• “Adjustable peg” currency • Quotas embedded in the IMF• Members were forbidden to engage in
discriminatory currency practices• The creation of the IMF and World Bank• The dollar standard
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• Post-war monetary relations
were unstable
• The member nations
underestimated the strength
of their funds... after two
years of lending, the IMF was
drained of its money
Problems
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The Implied Bargain
The U.S. becomes a global hegemon due to strength of the dollar
US's allies acquiesce to this hegemonic system because it benefits their own economies
U.S. allows allies’ use of the system for their own benefit
U.S. is able to act unilaterally to secure its own interests
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The End of the Bretton Woods System
• Due to the costs of the Vietnam War and nations
trading dollars for gold.
• The link between gold and the dollar is severed.
• Flexible exchange rates allow for countries to
adjust to increased prices.
• The formation of the European Monetary System.
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The World Bank and IMF are still active, although they have been
severely criticized for some of their policies
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THANK YOU