Explain Bretton wood system ?

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The Bretton Woods Agreement and Systemcreated a collective international currency exchange regime that lasted from the mid-1940s to the early 1970s. The Bretton Woods System required a currency peg to the U.S. dollar which was in turn pegged to the price of gold

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The Bretton Wood Conference established the International Monetary Fund (IMF) to deal with external surplus and deficits of its member nations.
The IMF and World Bank are referred as twins of Bretton Woods. The post-war international economic system is also described as the Bretton Woods System.

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Bretton Woods refers to the international monetary arrangement,agreed upon by the allied nations in 1944 in Bretton Woods, US, that created the IMF and World Bank and that set up a system of fixed exchange rates with the US dollar as the international reserve currency.

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The Bretton Woods system was the first system used to control the value of money between different countries. It meant that each country had to have a monetary policy that kept the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold.

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The Bretton Woods system was the first system used to control the value of money between different countries. It meant that each country had to have a monetary policy that kept the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold.

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It was clear during the Second World War that a new international system would be needed to replace the Gold Standard after the war ended. The design for it was drawn up at the Bretton Woods Conference in the US in 1944. US political and economic dominance necessitated the dollar being at the centre of the system. After the chaos of the inter-war period there was a desire for stability, with fixed exchange rates seen as essential for trade, but also for more flexibility than the traditional Gold Standard had provided. The Bretton Woods system was drawn up and fixed the dollar to gold at the existing parity of US$35 per ounce, while all other currencies had fixed, but adjustable, exchange rates to the dollar...

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。 Bretton woods - Bretton Woods is the name of hotel in USA where the national monetary and financial conference held in 1944 to ensure the stable economy.
。 establishment of IMF and World Bank.
。 bretton Woods system was based on fixed exchange rate.

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Answer

Bretton Wood System

The Bretton Woods System was a monetary system established in 1944 after the Second World War. It was created during the Bretton Woods Conference held in New Hampshire, USA. The Bretton Woods System was a set of rules that governed monetary policies between countries and fixed exchange rates to the US dollar.

Key Features

Fixed exchange rate: All the currencies were pegged to the US dollar, which in turn was pegged to gold at a fixed rate of $35 per ounce. This fixed exchange rate system provided stability in international trade.

International Monetary Fund (IMF): The IMF was established to maintain exchange rate stability and to provide funds to countries facing balance of payment problems. The IMF also provided loans to countries in need of financial assistance to meet their obligations.

World Bank: The World Bank was established to provide funds for reconstruction and development projects in post-war Europe. It provided long-term loans to countries for infrastructure development.

Advantages

Stability in international trade: The fixed exchange rate system provided stability in international trade, making it easier for countries to conduct business with each other.

Easy convertibility of currency: The Bretton Woods System made it easy for countries to convert their currencies to US dollars and gold, which facilitated international trade.

Financial assistance to countries: The IMF provided financial assistance to countries facing balance of payment problems, which helped stabilize their economies.

Infrastructure development: The World Bank provided long-term loans for infrastructure development, which helped improve the standard of living in developing countries.

Disadvantages

US dollar dominance: The Bretton Woods System gave the US dollar an undue advantage as it was the only currency that was directly convertible to gold. This led to the US accumulating large amounts of gold reserves, while other countries had to hold US dollars as reserves.

Inflexibility of exchange rates: The fixed exchange rate system made it difficult for countries to adjust their exchange rates to reflect changes in their economies. This led to countries resorting to other measures such as devaluing their currencies or imposing capital controls.

Speculative attacks: The fixed exchange rate system made countries vulnerable to speculative attacks, where traders would buy a currency in large quantities, causing its value to rise, and then sell it off, causing its value to plummet.

The Bretton Woods System collapsed in 1971 when the US suspended the convertibility of US dollars to gold. This led to the floating exchange rate system, where exchange rates are determined by market forces.

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The Bretton Woods system of international monetary management established the rules for commercial and financial relations among the world's major industrial states. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.

hope it will help u :)

Answer

The Bretton Woods system was the first system used to control the value of money between different countries. It meant that each country had to have a monetary policy that kept the exchange rate of its currency within a fixed value plus or minus one percent in terms of gold.

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Bretton Woods system was the first system which was used to control the value of money between different countries ,was created in 1944 conference of all World War II allied Nation it took place in Britain Woods new Hampshire under the agreement countries promised that their Central banks world maintain fixed exchange rate between their currencies and dollars.

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