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Brettonwood Standard System

                 What Is the Brettonwood Standard System

A conference was held at Bretton Woods in the USA, in July 1944, in order to put in place a new international monetary system. The major objectives of this conference were 

1. to review the existing rules,
2. to devise a system to encourage international monetary cooperation, and
3. to establish an international institution to ensure the good functioning of the system.

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major 
industrial states in the mid 20th century.

The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation
states.

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The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments.

The main characteristics of the international monetary system developed at Bretton Woods can be summarized as follow.

Fixed rates in terms of gold (i.e. a system of the gold standard), but only the US dollar was convertible into gold as the USA ensured convertibility of dollars into gold at the international level.

procedure for mutual international credits

Devaluation or revaluation of more than 5 percent had to be done with the permission of the IMF This measure was necessary to avoid chain devaluations like the ones which occurred before the Second World War.

The purpose of the Bretton Woods meeting was to set up a new system of rules, regulations, and procedures for the major economies of the world. The main goal of the agreement was economic stability for the major economic powers of the world. 

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