The Bretton Wood Woods conference took place from 1 July – 22 July 1944 at the Mount Washington hotel, Bretton Woods New Hampshire. It was attended by representatives from 44 nations
The purpose of the conference was to formulate a new international monetary and financial system after the conclusion of World War two
There was a high level of agreement among the powerful nations that failure to coordinate exchange rates during the interwar period had exacerbated political tensions. This 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.
The conference followed discussions during the war between John Maynard Keynes of the British Treasury and Harry Dexter White of the United States Treasury to develop ideas about a post world War financial order
Keynes had proposed an international clearing union to regulate the balance of trade, a bank with its own currency the bancor, exchangeable with national currencies at a fixed rate. Each country would have an overdraft facility
The ICU was opposed by the Americans
The outcome of the Bretton Woods conference was the creation of the World Bank to provide capital for economic reconstruction and the International Monetary Fund which would lend short terms funds to countries in difficulties
The Bretton Woods system required each country to adopt a monetary policy to maintain its external exchange rates within 1% by tying its currency to gold with the ability of the IMF to bridge temporary imbalances of payments
On 13 August 1971 the United States unilaterally terminated convertibility of the US dollar to gold bringing the Bretton Woods system to an end and converting the dollar to a fiat currency
The US dollar became a reserve currency used by many states. Other currencies such as the pound sterling became free floating
Qs
why did the Bretton Woods system fail
Would Keynes ICU have worked better
What is wrong now and how would we improve it
Source
