Question

What was bretton woods system? what were its distinctive features?

Answer 1

The Bretton Woods Agreement:

The Bretton Woods Agreement was agreed at the United Nations Monetary and Financial Conference that was held in Bretton Woods of New Hampshire, from July 1 to July 22, 1944.

The Bretton Woods Agreement is the milestone system to manage monetary and exchange rate.

This created the World Bank and IMF to set up a system of fixed exchange rates with the US dollar as the international reserve currency.

Answer 2

The Bretton Woods system was a monetary management system that was set as the rules for commercial and financial relations among the world's major industrial nations. The main reason behind it's establishment was to allow manipulation of international monetary system through these rules, institutions and procedures. The institutions were International Bank for Reconstruction and Development (IBRD) and International Monetary Fund (IMF).

The distinctive features of were:


1. Avoiding unstable exchange rates and competitive devaluations caused by pre WWII(World War 2) economies by instituting fixed exchanged rates

2. Financing the reconstruction of Europe during the Post War period

3. International Bank for Reconstruction & Development (IBRD) which was the World Bank then was established to serve the 1st objective while IMF (International Monetary Fund) was to serve the 2nd objective