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12 Oct 15
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Bretton Woods system
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments.
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07 May 14
Wesley Roberts" members, when short of reserves, would be able to borrow foreign currency in amounts determined by the size of its quota. In other words, the higher the country's contribution was, the higher the sum of money it could borrow from the IMF.
Members were required to pay back debts within a per" -
09 Apr 14
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10 Mar 14
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confluence of two key conditions: first,the shared experiences of two World Wars, with the sense that failure to deal with economic problems after the first war had led to the second; and the concentration of power in a small number of states
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many "assets" on bank balance sheets internationally were actually unrecoverable loans, which culminated in the 1931 banking crisis
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1920s, international flows of speculative financial capital increased, leading to extremes in balance of payments situations in various European countries and the US
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The various anarchic and often autarkic protectionist and neo-mercantilist national policies – often mutually inconsistent – that emerged over the first half of the decade worked inconsistently and self-defeatingly to promote national import substitution, increase national exports, divert foreign investment and trade flows, and even prevent certain categories of cross-border trade and investment outright
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the way out of the trade deficit was to devalue the currency. But Britain couldn't devalue, or the Empire surplus would leave its banking system
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Britain survived by keeping Sterling nation surpluses in its banking system, and Germany survived by forcing trading partners to purchase its own products
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watchwords became "no more beggar thy neighbor," "control flows of speculative financial capital."
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monetary policy in several major countries turned contractionary in the late 1920s—a contraction that was transmitted worldwide by the gold standard
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representatives from all the leading allied nations collectively favored a regulated system of fixed exchange rates, indirectly disciplined by a US dollar tied to gold – a system that relied on a regulated market economy with tight controls on the values of currencies
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liberal international economic system required governmental intervention
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the role of government in the national economy had become associated with the assumption by the state of the responsibility for assuring its citizens of a degree of economic well-being
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03 Mar 14
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Preparing to rebuild the international economic system while World War II was still raging
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planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD)
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments.
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This action, referred to as the Nixon shock, created the situation in which the United States dollar became a reserve currency used by many states. At the same time, many fixed currencies (such as GBP, for example), also became free-floating.
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The political basis for the Bretton Woods system was in the confluence of two key conditions: first,the shared experiences of two World Wars, with the sense that failure to deal with economic problems after the first war had led to the second; and the concentration of power in a small number of states
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Thus, many "assets" on bank balance sheets internationally were actually unrecoverable loans, which culminated in the 1931 banking crisis.
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that failure to coordinate exchange rates during the interwar period had exacerbated political tensions facilitated the decisions reached by the Bretton Woods Conference. Furthermore, all the participating governments at Bretton Woods agreed that the monetary chaos of the interwar period had yielded several valuable lessons.
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as the crisis continued saw some trading nations using currency devaluations in an attempt to increase their competitiveness
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hoped to avoid a repeat of the Versailles Treaty a
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hence the US supported free trade and international convertibility of currencies into gold or dol
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John Maynard Keynes was the brain behind Britain's proposal that surplus nations be forced by a "use-it-or-lose-it" surplus, to either import from debtor nations, build factories in debtor nations or donate to debtor nations.[9] One suspects t
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[T]he proximate cause of the world depression was a structurally flawed and poorly managed international gold standard
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In 1944 at Bretton Woods, as a result of the collective conventional wisdom of the time, representatives from all the leading allied nations collectively favored a regulated system of fixed exchange rates, indirectly disciplined by a US dollar tied to gold – a system that relied on a regulated market economy with tight controls on the values of currencies.
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Also based on experience of the inter-war years, U.S. planners developed a concept of economic security – that a liberal international economic system would enhance the possibilities of postwar peace.
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Unlike national economies, however, the international economy lacks a central government that can issue currency and manage its use.
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The architects of Bretton Woods had conceived of a system wherein exchange rate stability was a prime goal. Yet, in an era of more activist economic policy, governments did not seriously consider permanently fixed rates on the model of the classical gold standard of the 19th century.
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What emerged was the "pegged rate" currency regime.
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and to maintain exchange rates within plus or minus 1% of parity (a "band") by intervening in their foreign exchange markets (that is, buying or selling foreign money).
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making the "reserve currency" the U.S. dollar.
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Meanwhile, to bolster faith in the dollar, the U.S. agreed separately to link the dollar to gold at the rate of $35 per ounce of gold.
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the goal to avoid a recurrence of the closed markets and economic warfare that had characterized the 1930s.
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to favor incentives designed to create price stability within the world's economies, while Keynes' wanted a system that encouraged economic growth.
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ut the United States, as a likely creditor nation, and eager to take on the role of the world's economic powerhouse, balked at Keynes' plan and did not pay serious attention to it. White saw a
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ole for global intervention in an imbalance only when it was caused by currency speculation.
Although compromise was reached on some points, because of the overwhelming economic and military power of the United States the participants at Bretton Woods largely agreed on White's plan
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In other words, the United States would have to reverse the imbalances in global wealth by running a balance of trade deficit, financed by an outflow of US reserves to other nations (a US financial account deficit)
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dollars had to leave the United States and become available for international use in order for them to do so
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From 1947 until 1958, the U.S. deliberately encouraged an outflow of dollars, and, from 1950 on, the United States ran a balance of payments deficit with the intent o
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When this triangle became destabilized, Bretton Woods entered a period of crisis that ultimately led to its collapse
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fter the end of World War II, the U.S. held $26 billion in gold reserves, of an estimated total of $40 billion (approx 65%).
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Gold convertibility enforcement was not required, but instead, allowed
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However, there was still an open gold market. For the Bretton Woods system to remain workable, it would either have to alter the peg of the dollar to gold, or it would have to maintain the free market price for gold near the $35 per ounce official price.
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when Triffin noted that if the U.S. failed to keep running deficits the system would lose its liquidity, not be able to keep up with the world's economic growth, and, thus, bring the system to a halt. But incurring such payment deficits also meant that, over time, the deficits would erode confidence in the dollar as the reserve currency created instability
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The Fund was charged with managing various nations' trade deficits so that they would not produce currency devaluations that would trigger a decline in imports.
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If this sum should be insufficient, each nation in the system is also able to request loans for foreign currency.
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The IMF was designed to advance credits to countries with balance of payments deficits
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But this did not prove sufficient to get Europe out of its conundrum.
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From 1948 to 1954 the United States provided 16 Western European countries $17 billion in grants.
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In 1967, there was an attack on the pound and a run on gold in the sterling area, and on 18 November 1967, the British government was forced to devalue the pound
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While West Germany agreed not to purchase gold from the U.S., and agreed to hold dollars instead, the pressure on both the dollar and the pound sterling continued.
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01 Mar 14
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11 Feb 14
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments.
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On 15 August 1971, the United States unilaterally terminated convertibility of the US$ to gold. This brought the Bretton Woods system to an end and saw the dollar become fiat currency.[1] This action, referred to as the Nixon shock, created the situation in which the United States dollar became a reserve currency used by many states. At the same time, many fixed currencies (such as GBP, for example), also became free-floating.
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31 Jan 14
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On 15 August 1971
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Bretton Woods system
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17 Oct 12
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10 Oct 12
zoo89 r(*see:)
http://www.diigo.com/item/note/54lz/vkhr-
The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments.
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01 May 12
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The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
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The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid-20th century.
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Preparing to rebuild the international economic system as World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference.
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Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group.
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On 15 August 1971, the United States unilaterally terminated convertibility of the US$ to gold. This brought the Bretton Woods system to an end and saw the dollar become fiat currency
-
This action, referred to as the Nixon shock, created the situation in which the United States dollar became a reserve currency used by many states. At the same time, many fixed currencies (such as GBP, for example), also became free floating.
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments.
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Free trade relied on the free convertibility of currencies. Negotiators at the Bretton Woods conference, fresh from what they perceived as a disastrous experience with floating rates in the 1930s, concluded that major monetary fluctuations could stall the free flow of trade.
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The new economic system required an accepted vehicle for investment, trade, and payments. Unlike national economies, however, the international economy lacks a central government that can issue currency and manage its use. In the past this problem had been solved through the gold standard, but the architects of Bretton Woods did not consider this option feasible for the postwar political economy. Instead, they set up a system of fixed exchange rates managed by a series of newly created international institutions using the U.S. dollar (which was a gold standard currency for central banks) as a reserve currency.
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In the 19th and early 20th centuries gold played a key role in international monetary transactions. The gold standard was used to back currencies; the international value of currency was determined by its fixed relationship to gold; gold was used to settle international accounts. The gold standard maintained fixed exchange rates that were seen as desirable because they reduced the risk when trading with other countries.
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The architects of Bretton Woods had conceived of a system wherein exchange rate stability was a prime goal. Yet, in an era of more activist economic policy, governments did not seriously consider permanently fixed rates on the model of the classical gold standard of the 19th century. Gold production was not even sufficient to meet the demands of growing international trade and investment. And a sizeable share of the world's known gold reserves were located in the Soviet Union, which would later emerge as a Cold War rival to the United States and Western Europe.
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What emerged was the "pegged rate" currency regime. Members were required to establish a parity of their national currencies in terms of the reserve currency (a "peg") and to maintain exchange rates within plus or minus 1% of parity (a "band") by intervening in their foreign exchange markets (that is, buying or selling foreign money).
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This meant that other countries would peg their currencies to the U.S. dollar, and—once convertibility was restored—would buy and sell U.S. dollars to keep market exchange rates within plus or minus 1% of parity. Thus, the U.S. dollar took over the role that gold had played under the gold standard in the international financial system.
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The U.S. dollar was the currency with the most purchasing power and it was the only currency that was backed by gold. Additionally, all European nations that had been involved in World War II were highly in debt and transferred large amounts of gold into the United States, a fact that contributed to the supremacy of the United States[citation needed]. Thus, the U.S. dollar was strongly appreciated in the rest of the world and therefore became the key currency of the Bretton Woods system.
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24 Apr 12
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The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
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15 Mar 12
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The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
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Preparing to rebuild the international economic system as World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States,
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July 1944
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the planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments.
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On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, "[t]he Bretton Woods system officially ended and the dollar became fully 'fiat currency,' backed by nothing but the promise of the federal government."[1] This action, referred to as the Nixon shock,
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They argue that in the early 2000s, like 40 years earlier, the international system is composed of a core issuing the dominant international currency, and a periphery. The periphery is committed to export-led growth based on the maintenance of an undervalued exchange rate. In the 1960s, the core was the United States and the periphery was Europe and Japan. This old periphery has since graduated, and the new periphery is Asia. The core remains the same, the United States. The argument is that a system of pegged currencies, in which the periphery export capital to the core that provides a financial intermediary role is both stable and desirable, although this notion is controversial.[21] The term dollar hegemony was populised by Henry C.K. Liu to describe the hegemonic role of the US dollar in the globalized economy."[22]
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13 Feb 12
bob dolanThe Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
Preparing to rebuild the international economic system as World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for 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. -
15 Aug 11
annestOn August 15, 1971, Nixon "closed the gold window", making the dollar inconvertible to gold directly http://t.co/ZPXoJu6 - 40 years ago
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14 May 11
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governments did not seriously consider permanently fixed rates on the model of the classical gold standard of the nineteenth century. Gold production was not even sufficient to meet the demands of growing international trade and investment.
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The only currency strong enough to meet the rising demands for international currency transactions was the U.S. dollar. The strength of the U.S. economy, the fixed relationship of the dollar to gold ($35 an ounce), and the commitment of the U.S. government to convert dollars into gold at that price made the dollar as good as gold. In fact, the dollar was even better than gold: it earned interest and it was more flexible than gold.
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In theory, the reserve currency would be the bancor (a World Currency Unit that was never implemented), suggested by John Maynard Keynes; however, the United States objected and their request was granted, making the "reserve currency" the U.S. dollar. This meant that other countries would peg their currencies to the U.S. dollar, and—once convertibility was restored—would buy and sell U.S. dollars to keep market exchange rates within plus or minus 1% of parity. Thus, the U.S. dollar took over the role that gold had played under the gold standard in the international financial system.
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17 Apr 11
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15 Nov 10
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the planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group. These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement.
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.
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09 Oct 10
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27 Sep 10
Stan Harrison"On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. This action, referred to as the Nixon shock, created the situation in which the United States dollar became the sole backing of currencies and a reserve currency for the member states"
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On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. This action, referred to as the Nixon shock, created the situation in which the United States dollar became the sole backing of currencies and a reserve currency for the member states
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13 Apr 10
ronald fullerThe chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. Then, on August 15, 1971 the United States unilaterally terminated convertibility of the dollar to gold. This action created the situation whereby the United States dollar became the sole backing of currencies and a reserve currency for the member states. In the face of increasing financial strain, the system collapsed in 1971.
delicious economics government history international politics financial
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28 Mar 10
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country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the
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18 Mar 10
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Bretton Woods system
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Bretton Woods system
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first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states
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Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD)
-
chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value
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he ability of the IMF to bridge temporary imbalances of payments.
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he rules of Bretton Woods, set forth in the articles of agreement of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD),
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What emerged was the "pegged rate" currency regime. Members were required to establish a parity of their national currencies in terms of gold (a "peg") and to maintain exchange rates within plus or minus 1% of parity (a "band") by intervening in their foreign exchange markets (that is, buying or selling foreign money).
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countries would peg their currencies to the U.S. dollar, and—once convertibility was restored—would buy and sell U.S. dollars to keep market exchange rates within plus or minus 1% of parity
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U.S. dollar took over the role that gold had played under the gold
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to bolster faith in the dollar, the U.S. agreed separately to link the dollar to gold at the rate of $35 per ounce of gold.
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Bretton Woods established a system of payments based on the dollar, in which all currencies were defined in relation to the dollar, itself convertible into gold, and above all, "as good as gold".
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U.S. currency was now effectively the world currency
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The U.S. dollar was the currency with the most purchasing power and it was the only currency that was backed by gold. Additionally, all European nations that had been involved in World War II were highly in debt and transferred large amounts of gold into the United States, a fact that contributed to the supremacy of the United States. Thus, the U.S. dollar was strongly appreciated in the rest of the world and therefore became the key currency of the Bretton Woods system.
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Member countries could only change their par value with IMF approval, which was contingent on IMF determination that its balance of payments was in a "fundamental disequilibrium".
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Structural changes underpinning the decline of international monetary management
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1960s and 70s, important structural changes eventually led to the breakdown of international monetary managemen
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high level of monetary interdependence.
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Convertibility facilitated the vast expansion of international financial transactions, which deepened monetary interdependence.
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Another aspect of the internationalization of banking has been the emergence of international banking consortia
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Multinational banks
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hedging and speculating against exchange rate fluctuations.
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new forms of monetary interdependence made possible huge capital flows.
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virtually risk-free temptation for speculators.
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combination of risk-free speculation with the availability of huge sums was highly destabilizing.
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A second structural change that undermined monetary management was the decline of U.S. hegemony
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e E.E.C. and Japan h
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more pluralistic distribution of economic power led to increasing dissatisfaction with the privileged role of the U.S. dollar as the international currency.
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world's central banker, the U.S., through its deficit, determined the level of international liquidity
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U.S. political and security umbrella helped make American economic domination palatable for Europe and Japan,
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continuing decline of the dollar
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increased dollar outflow to pay for the military expenditures and rampant inflation, which led to the deterioration of the U.S. balance of trade position.
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dollar was overvalued with its current trading position, w
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Deutsche Mark and the yen were undervalued
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upon the creation of Bretton Woods, with the U.S. producing half of the world's manufactured goods and holding half its reserves,
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By 1970 the U.S. held under 16% of international reserves.
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holders of the dollar had lost faith in the ability of the U.S
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a 10% import surcharge, a
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"closed the gold window", making the dollar inconvertible to gold directly,
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1972 $70.30/ounc
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n gold becoming a floating ass
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reopened in March in a floating currency regime.
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09 Dec 09
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The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states
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planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group.
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obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold
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system collapsed in 1971, after the United States unilaterally terminated convertibility of the dollars to gold.
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United States dollar became the "reserve currency"
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19 Sep 09
Lynette DimmickThis webpage incorporates worthy info on bank
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18 Sep 09
Gail MaxwellA webpage on bank
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31 Mar 09
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13 Jan 09
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monetary order intended to govern monetary relations among independent nation-states.
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institutions, and procedures to regulate the international monetary system,
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. In the face of increasing strain, the system collapsed in 1971, following the United States' suspension of convertibility from dollars to gold. This created the unique situation whereby the United States dollar became the "reserve currency" for the states which had signed the agreement.
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08 Dec 08
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27 Nov 08
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30 Sep 08
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24 Sep 08
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the planners at Bretton Woods established the International Bank for Reconstruction and Development (IBRD) (now one of five institutions in the World Bank Group) and the International Monetary Fund (IMF).
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In the face of increasing financial strain, the system collapsed in 1971, after the United States unilaterally terminated convertibility of the dollars to gold
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments.
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On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold. This brought the Bretton Woods system to an end and saw the dollar become fiat currency
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A country with a deficit would have depleted gold reserves and would thus have to reduce its money supply. The resulting fall in demand would reduce imports and the lowering of prices would boost exports; thus the deficit would be rectified.
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Any country experiencing inflation would lose gold and therefore would have a decrease in the amount of money available to spend. This decrease in the amount of money would act to reduce the inflationary pressure
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04 Aug 08
Dante-Gabryell MonsonThroughout the war, the United States envisaged a postwar economic order in which the U.S. could penetrate markets that had been previously closed to other currency trading blocs, as well as to expand opportunities for foreign investments for U.S. corpora
Economics UnitedStates Control Finance Wikipedia power monetarypolitics politics history
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17 May 08
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07 Mar 08
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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. In the face of increasing strain, the system collapsed in 1971, following the United States' suspension of convertibility from dollars to gold.
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10 Dec 07
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delegates
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31 Dec 06
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21 Nov 06
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10 Apr 06
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