What is Bretton Woods

Bretton Woods is a city located in the United States, which became popular in 1944 for hosting the United Nations monetary and financial congress. Two of the most important financial organizations were established at this conference: the World Bank and the International Monetary Fund (IMF).

In addition, agreements of great relevance to the world economy were signed. It was there that the statutes or norms that guide the financial and commercial relations agreed between the most prominent industrialized countries in the world emerged.

After the Second World War, it was possible to clearly observe the existence of two groups of countries: those with a strong economic level (industrialized countries) and those that were in a less favorable state (underdeveloped countries). To counter this situation, it was agreed that economically stable countries would help those with less economic capacity through resource allocation.

This was the objective of this convention: the creation of a system whose objectives were to promote world economic development, promote trade relations between countries, in order to create stability both within the nations that participated in the agreement, as in the other states. .

This treaty had the participation of 44 countries where the United States (considered the country with the strongest economy in the world), France, England and China, and some representatives of Latin American countries that, at the time, remained under the influence of the U.S. The Soviet Union was present at the convention, but could not adhere to any of the agreements.

The agreements signed at that meeting were: the establishment of a fixed exchange rate of the value of the currency in relation to gold, in order to facilitate the exchange of currencies between the signatory nations of the agreement. The International Monetary Fund (IMF) was created with the objective of granting loans to member countries with balance of payments difficulties in exchange for alliances that would reorient their economic policy. Likewise, the World Bank was created whose mission was to financially support war-torn countries. Finally, the creation of the so-called “General Agreement on Tariffs and Trade” (GATT) was agreed, which was replaced by the World Trade Organization (WTO).

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The benefits generated by this agreement could be evidenced in the great economic stability that prevailed between the 50s and 60s, stability that allowed countries like Germany and Japan to strengthen their economies, something really unimaginable after the disastrous destruction that these nations later experienced. of war. Without these agreements, states like France, England and Italy (destroyed by the war) would not have arisen either.

The Bretton Woods accords began to be broken during the Vietnam War, ending finally in 1971 when the United States, being financing this conflict, neglected its economy and for the first time in the 20th century it had its first trade deficit.

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