Bretton Woods System

abhishreshthaa

New member
Fixed Exchange Rate System ( Bretton Woods System)

  • Introduced in 1944

  • Birth of IMF

  • US$ convertible into gold at a fixed parity of $35 per ounce

  • Other member countries of IMF agreed to fix the parity of their currency vis-a-vis dollar with variation 1% on either side


Problem in Bretton Woods System

  • The system was abolished in 1971 and was later succeeded by floating exchange rate system

  • As US Balance of Payments deficit started mounting and in 1971 convertibility was completely abandoned

  • World liquidity was not keeping pace with the growth in world trade
 
Top