RISE AND FALL OF BRETTON WOODS
Published: 21 Aug 2015
Abstract: The aim of this research is to reveal the causes that brought to the collapse of The Bretton Woods system based on the convertibility of gold to the US dollar, fixed but adjustable exchange rates, and the election of one national currency as a world currency. Based on analysis of the ratio between gold reserves and currencies, it can be concluded that due to the sudden increase in demand for commodities, and gold as a means of payment, there is a deviation from the golden rule and the attachment of currency to gold, in order to protect their own gold reserves. In the case of Bretton Woods agreement, unwillingness of the United States to, based on similar circumstances, devalue US dollar, and the desire to protect their own gold reserves, leading to collapse of The Bretton Woods system.
Keywords: gold, gold standard, currency, exchange rate, devaluation, bretton woods system, international monetary fund
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