3. Events leading up to the
conference
• Restrictive market practices which caused the
devaluation, deflation and depression that
defined the economy of the 1930s.
• World War II
• The gold standard
4. • Intended to govern currency regulations and
establish legal obligations (through the IMF)
• Set a standard for exchange rates
• Establish international monetary cooperation
• Money pool from which member nations can
borrow funds
Goals of the Conference
5. Outcome
(formally established December 27, 1945)
• “Adjustable peg” currency
• Quotas embedded in the IMF
• Members were forbidden to engage in
discriminatory currency practices
• The creation of the IMF and World Bank
• The dollar standard
6. • Post-war monetary relations
were unstable
• The member nations
underestimated the strength
of their funds... after two
years of lending, the IMF was
drained of its money
Problems
7. The Implied Bargain
The U.S.
becomes a global
hegemon due to
strength of the
dollar
US's allies acquiesce to this
hegemonic system because it
benefits their own economies
U.S. allows allies’
use of the system
for their own benefit
U.S. is able to act
unilaterally to
secure its own
interests
8. The End of the Bretton Woods
System
• Due to the costs of the Vietnam War and nations
trading dollars for gold.
• The link between gold and the dollar is severed.
• Flexible exchange rates allow for countries to
adjust to increased prices.
• The formation of the European Monetary System.
9. The World Bank and IMF are still
active, although they have been
severely criticized for some of their
policies
