The international gold standard was declared dead in 1933 at the London Conference although all major nations including the UK, the US, Italy, and France wanted a return to the international gold standard. The proposal of drawing rights with the aim of stabilizing exchange rates also could not be initiated. The reason for the collapsing gold standard was attributed to the US and the UK forcing low peg to gold, as a result no consensus could e reached among major countries on returning back to gold standard. Increased tariff barriers were also one of the reasons hindering other nations to support a return to the gold standard. also other nations doubted Britain’s intentions of getting the benefit in the Commonwealth by not effectively forcing fiscal measures (Action Forex 2010). Some of the rescue options included reining in of foreign capital flow to safeguard emerging economies, strengthening the monetary power of the IMF and codification of debt rescheduling by permitting countries to request IMF to file for a debt hold agreement (Mandel &. Foust 1998).
From 1939 to 1942 Britain exhausted all its stock of gold in purchasing ammunition, which made it clear that return to the gold standard was not possible. The predictions of John Maynard Keynes got proved to become a part of the “stability pact” finding Keynes voice heard in the Bretton Woods Agreement, signed on 1944 (Action Forex 2010).
Bretton Woods Agreement was signed for the establishment of International Bank for Reconstruction (IBRD, the World Bank), etc.