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 of 1944 introduced a new global monetary system. It replaced the gold standard with the U.S. dollar as the global currency. It thus established America as a dominant power in the global economy. After the agreement was signed, America was the only country with the ability to print dollars. The Bretton Woods Accords were signed between the world powers in July 1944 at Bretton Woods, New Hampshire, USA. It created the International Monetary Fund (IMF) to deal with external surpluses and deficits in its member states and the International Bank for Reconstruction and Development was created for post-reconstruction financing. The Bretton Woods countries have decided not to give the IMF the power of a global central bank. Instead, they agreed to contribute to a solid pool of national currencies and gold, which would be held by the IMF. Each member country of the Bretton Woods system then had the right to borrow as part of its dues, which it needed.
The IMF was also responsible for implementing the Bretton Woods agreement. The World Bank was not (and is) not the central bank of the world. At the time of the Bretton Woods agreement, the World Bank was created to lend to European countries devastated by the Second World War. The World Bank`s focus has changed in lending to economic development projects in emerging countries. 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 became too low against the dollar, the bank would buy its currency back on the foreign exchange markets. It took place in Bretton Woods, New Hampshire. As part of the agreement, countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar. The agreement created the World Bank and the International Monetary Fund (IMF), U.S.-backed organizations, to oversee the new system. Until the First World War, most countries were on the gold standard.
But they cut the tie on gold so they could print the money they needed for their war costs. This influx of money has caused hyperinflation, as the supply of money has overwhelmed demand. After the war, countries returned to the security of the gold standard. In 1971, the United States suffered from massive stagflation – a combination of inflation and recession that causes unemployment and weak economic growth. As a result, the value of the dollar began to rise relative to other currencies. Hyperinflation has caused the value of money to fall so dramatically that, in some cases, people need wheelbarrows full of money to buy a loaf of bread. The Bretton Woods system has given nations more flexibility than strict adherence to the gold standard. It also offered less volatility than a monetary system without a standard in general.