Citizen Media Watch

december 21st, 2020

What Was The Ultimate Goal Of The Bretton Woods Agreement

Posted by lotta

The IMF has attempted to provide for exchange rate adjustments from time to time (a change in the face value of a member) by an international agreement. Member States have been allowed to adjust their exchange rates by 1%. This trend has been to restore the balance of trade by increasing exports and reducing imports. This would only be permissible if there was a fundamental imbalance. A depreciation of a country`s money was described as a devaluation, while an increase in the value of the country`s money was described as an appreciation. The Atlantic Charter, developed during the meeting between U.S. President Franklin D. Roosevelt and British Prime Minister Winston Churchill on a North Atlantic ship in August 1941, was the most important precursor to the Bretton Woods Conference. Like Woodrow Wilson before him, whose ”Fourteen Points” had outlined the objectives of the United States after World War I, Roosevelt presented a series of ambitious goals for the post-war world even before the United States entered World War II. The Bretton Woods Agreement was the result of a series of negotiations between the Allies towards the end of World War II.

In 1944, nations agreed on how to build the world`s financial system after the war. The deal takes its name from Bretton Woods, New Hampshire, where negotiators met to discuss the plan. This criticism relates to the procedures and approaches of the two institutions. The common goal of the IMF and the World Bank can be seen as helping the world`s weakest economies and to narrow the gap between prosperity and poverty in the world. Few commentators oppose these goals. But both institutions have been accused of working in a way that not only fails to achieve these objectives, but also deteriorates the conditions of the economies they claim to want to improve. The World Bank, for example, has often conditioned loans to countries in urgent need of economic assistance that critics say has increased unemployment and destabilized economies. The Bretton Woods system established a new monetary order. The name comes from the place where the agreements were developed, Bretton Woods, New Hampshire. This meeting took place in July 1944. The Bretton Woods system was an attempt to avoid global economic disasters, such as the Great Depression, which began in 1929 and lasted a decade.

In a way, it ultimately did not; Since the abandonment of the gold standard, all world currencies have oscillated against each other — a situation that was inherently less stable than the dominance of the U.S. dollar from 1944 to 1971. The first objective was to create a more flexible monetary system than the gold standard.

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