What Is The Role Of The Bretton Woods Agreement In The Creation Of International Organizations
The World Bank and the IMF were created at the end of the Second World War. They were based on the ideas of a trio of key experts – U.S. Treasury Secretary Henry Morganthau, his chief economics adviser, Harry Dexter White, and British economist John Maynard Keynes. They wanted to create a post-war economic order based on consensus conceptions of decision-making and cooperation in the field of trade and economic relations. Allied leaders, particularly the United States and Britain, felt that a multilateral framework was needed to overcome the destabilizing effects of the former global economic depression and trade battles. In the 1920s, international flows of speculative financial capital increased, causing extreme balance-of-payments situations in various European countries and the United States.  In the 1930s, global markets never broke down barriers and restrictions on the volume of international trade and investment – barriers built without plan, motivated and imposed at the national level. The various national policies, which are anarchic and often autarcic and neo-mercantilist – often inconsequential – that emerged during the first half of the decade, have worked inconsistently and self-destructively to promote domestic substitution of imports, to increase domestic exports, to divert foreign investment and trade flows and even to directly prevent certain categories of cross-border trade and investment. Global central bankers tried to deal with the situation by meeting, but their understanding of the situation and difficulties in international communication hampered their capacity.
 The lesson was that it was not enough to have only responsible and hard-working central bankers. The only currency strong enough to meet the growing demands for international currency transactions was the U.S. dollar. The strength of the U.S. economy, the strong relationship of the dollar with gold ($35 per ounce) and the U.S. government`s commitment to convert the dollar to gold at this price have made the dollar as good as gold. In fact, the dollar was better than gold: it earned interest and was more flexible than gold. A second structural change, which undermined monetary management, was the decline of American hegemony.
The United States was no longer the dominant economic power it had been for more than two decades. By the mid-1960s, the E.C and Japan had become autonomous international economic powers. With total reserves higher than those of the United States, higher growth rates and trade, as well as per capita income, which was close to that of the United States, Europe and Japan, narrowed the gap between itself and the United States. Thus, the most developed market economies subscribed to the U.S. vision of post-war international economic management, which aimed to create and maintain an effective international monetary system and encourage the reduction of trade and capital flows. In a way, the new international monetary system was a return to a system similar to the pre-war gold standard, which used only the U.S. dollar as the new reserve currency in the world, until international trade redistributed the world`s gold supply. The Bretton Woods Agreement was launched in 1944 at a conference of all allied nations of the Second World War. It took place in Bretton Woods, New Hampshire.
The Bretton Woods Agreement is one of those turning points in the development of modern financial systems, which established the dollar as the standard currency for world trade after World War II. While the Bretton Woods system was demanting during the Nixon administration, the financial institutions created by the Agreement – the International Monetary Fund and the World Bank – remain part of the finances of the 21st century. As part of the agreement, countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar. If a country`s monetary value becomes too low against the dollar, the bank would buy back its currencyShare