What was the Bretton Woods Conference?
The Bretton Woods conference was a conference held during World War II. Mainly discusses world economic issues.
Bretton Woods
- 1930s
- Between the First and Second World Wars, the global economic depression and fierce trade wars between nations prompted countries to strive to establish more stable
- International Monetary Fund
- Founded in 1945 and headquartered in Washington. Its purpose is to stabilize the international monetary system. The main tasks are: assist in the establishment of a multilateral payment system; strengthen international currency cooperation, and alleviate the imbalance in the balance of payments of member countries by providing short-term loans.
- It took several years before and after the establishment of the Bretton Woods system. Even before the end of World War II, some countries began to prepare for the reconstruction of the international monetary system after the war. The leading players were the United Kingdom and the United States.
- In early 1943, Keynes, a famous British economist, put forward a proposal calling for "international stability"
- Bretton Woods conference at
- The operation of the Bretton Woods currency system is closely related to the credibility and status of the US dollar. By the 1960s and 1970s, the United States was trapped in the quagmire of the Vietnam War, the fiscal deficit was huge, and the international income situation was deteriorating. Several dollar crises broke out. A large amount of capital fled, countries sold their dollars and snapped up gold, which drastically reduced the US gold reserves and the price of gold in London soared. In order to curb the rise in gold prices, maintain the US dollar exchange rate, and reduce the loss of gold reserves, the United States established the gold pool in October 1961 in conjunction with eight countries: Britain, Switzerland, France, West Germany, Italy, the Netherlands, and Belgium. The Bank of England is the agent of the gold pool, responsible for maintaining the price of gold in London and taking various measures to prevent foreign governments from holding USD foreign exchange to exchange gold with the United States.
- In the late 1960s, the United States further expanded the war of aggression, the balance of payments further deteriorated, and the dollar crisis broke out again. In the half-month of March 1968, the US gold reserves outflowed more than 1.4 billion US dollars. Only on March 14th, the London gold market's trading volume reached a record number of 350 to 400 tons. The United States no longer has the ability to maintain the official price of gold. After consulting with members of the gold treasury, it announced that it would no longer supply gold to the market at the official price of $ 35 per ounce, and the market price of gold was free to float. Settlement, gold has begun the double price system. However, the two-price system has also been maintained for three years, because the US balance of payments has continued to deteriorate and the US dollar has been unstable. Second, the Western countries have been dissatisfied with the United States' principle of self-interest, refusing to depreciate despite the US dollar crisis, and forcibly maintaining a fixed exchange rate. As a result, some European countries have adopted a strategy of inviting monarchs. Since the United States has refused to raise the price of gold and devalue the US dollar, they have exchanged US dollars for US reserve gold.
- When the news that France and other Western European countries were to exchange a large amount of gold in US dollars in August 1971, the United States had to announce on August 15 that it would stop fulfilling its obligations to foreign governments or central banks to exchange US dollars for gold. In December 1971, the "Smithsonian Agreement" was used as a symbol of the depreciation of the US dollar against gold. At the same time, the US Federal Reserve refused to sell gold to foreign central banks, and the US dollar-gold system was in name.
- In March 1973, the devaluation of the US dollar triggered another wave of European dollar sales and snapped-up gold. Western European and Japanese foreign exchange markets had to close for 17 days. After negotiations reached an agreement, Western countries abandoned the fixed exchange rate system and implemented a floating exchange rate system. At this point, the Bretton Woods monetary system completely collapsed, and the reform process of gold non-monetization began. However, it was not until 1976 that the international community reached the "Jamaica Agreement", which focused on the legalization of floating exchange rates and the de-monetization of gold. From a legal perspective, the de-monetization of gold in the international monetary system was not formally defined until 1978. The International Monetary Fund approved the revised International Monetary Fund Agreement by a majority vote in 1978. The agreement deletes all previous rules on gold, announcing that gold is no longer used as a currency valuation standard, abolishing the official price of gold, and freely buying and selling gold in the market; removing the requirement that the International Monetary Fund (IMF) must pay for gold ; Sell 1/6 gold of the International Monetary Fund, and use the profits to build preferential loan funds to help low-income countries; set up special drawing rights instead of gold for certain payments between member states and the IMF, etc.
- After the collapse of the Bretton Woods system, the International Monetary Fund and the World Bank still exist as important international organizations and play an important role.