Bretton Woods system: how it all began
A number of specialists know that longbefore the Bretton Woods system arose, there was a time of gold standard on our planet, when the pound sterling could be freely exchanged for gold. Britain at that time was a strong world power, so could afford such operations. However, everything changed in 1914, when in the period of World War I the US currency came to the financial arena, which spread in the North and Latin America.
In 1922, an attempt was made to createreserve currency and a gold standard based on the pre-war model. In 1925, England introduced the gold standard to the pound, secured by gold and reserve currency (US dollars). However, in 1929, America collapsed on the exchange, and in 1931 a panic began on the London financial market, which finally gave the pound a secondary role after the dollar. In 1931, 1933 in the United Kingdom and the United States, respectively, the gold standards were abolished; exchange rates became floating, which served as the basis for future forex systems. Attempts to create a gold convertibility of currencies by European countries collapsed (in 1936, the collapse of the "Golden Bloc", which included a number of countries, including France, Holland, etc.).
By the end of the 1940s, due to financialthe crises of the thirties and the Second World War in the world, there is a need for a radical renewal of the financial system. And in this connection, in 1944, the Bretton Woods Conference was convened, at which it was decided to link the currencies of 44 countries to the dollar, and the dollar to gold at a rate of $ 35 per troy ounce (31.1034 grams). After World War II, the United States concentrated the prevailing share of the world's gold reserves, which gave this country grounds for world leadership. In December 1944, the Bretton Woods system began its work.
At the 1944 conference, thecreation of two organizations that will exercise supervisory functions and provide funds to the countries-participants of the agreement to stabilize the national currency. They were the International Monetary Fund, as well as the International Bank for Reconstruction and Development. The Bretton Woods system assumed that gold remains the final means in international settlements, that national currencies freely circulate, that national currencies have fixed rates to the dollar, and central banks support this rate (+ 1 percent).
