Economic system set into place internationally in the conference at Bretton Woods The conference at Bretton Woods was held in the year 1944. The delegates present during the conference were from 44 countries. The conference led to the creation of a new monetary system commonly referred to as the Bretton Woods system. The delegates came together after the second war with the sole aims of reviewing the performance of the gold standard and the occurrence of a great depression in order to come up with a more effective international monetary system. The new system was supposed to be more effective in governing the financial and economic relations among the greatest economies in the world. Judging by the economic disasters that were experienced in the 1930s a new monetary system was considered to be a necessity.
Due to the failure of the gold standard during the World War II there was a breakdown in international economic cooperation with each and every country devolving their economic policies. This is believed to have further fuelled the growth of the great economic depression. The Bretton Woods system increases economic cooperation between countries that were under this system by providing a less rigid international monetary system (Steil 121). It also managed this by establishing rules and policies for financial and commercial relations between the main industrial states in the world.
As a result of the Bretton Woods system each and every member country was expected to adopt a monetary policy that ensured that the exchange rates of their currency remain at a certain value. However, it gave and allowance of either minus or plus one percent. This was aimed at making sure that no country would overvalue their exchange rate. In such fixed rates, there was evidently an increase in the ease of undertaking international commercial transactions.
In order to see to it that the Bretton Woods system was successful the delegates decided that they would establish two financial institutions. One of the two institutions was the International Monetary Fund (IMF). IMF was charged with the responsibility of making sure that lend reserve currencies to countries with balance of payment deficit and exchange rates were put under check. The agreement was that the member states who would sign the agreement would ensure that their rates were fixed, but with some minimal adjustability to the dollar (Allen 247). The value of the dollar war attached at $ 35 for an ounce. When a nation joined IMF, they would get a quota depending on the world economy ratings. This would also determine the amount of contribution that they make to the IMF fund. This move has been able to stabilize the national currencies of member countries, making it easier and fair for there to be international economic transactions.
The other institution that was brought into existence during the conference was the International Bank for Reconstruction and Development. The International Bank for Reconstruction and Development is what is modernly referred to as the World Bank Group. The International Bank for Reconstruction and Development was charged with the responsibility of giving financial help to member countries so that they could have an easy time as they rebuild after the World War II. It was also supposed to help in bringing economic development with the member countries that were considered to be less developed economically (Bernstein and Kirshner 198). The result of the establishment of this institution was a much quicker recovery from World War II economic aftermath and faster growth of less developed countries.
Allen, Larry. The Global Economic System Since 1945. London: Reaktion Books, 2005. Print.
Bernstein, Edward M, and Orin Kirshner. The Bretton Woods Gatt System: Retrospect and Prospect After Fifty Years. Armonk, NY [u.a.: Sharpe, 1996. Print.
Steil, Benn. The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order. Princeton: Princeton University Press, 2013. Internet resource.