Which Of The Following Organizations Emerged From The Bretton Woods Agreement

Discontent with the political impact of the dollar system was exacerbated by the détente between the United States and the Soviet Union. The military threat of the Soviet Union had been an important force in the consolidation of the U.S.-led monetary system. The political and security umbrella of the United States helped make American economic dominance tasty for Europe and Japan, which was economically exhausted by the war. As gross domestic production increased in European countries, trade increased. As security tensions eased, transatlantic dependence on defence eased and led to latent economic tensions. The strengthening of the relative decline in American power and The dissatisfaction of Europe and Japan with the system was the continued decline of the dollar, the basis that had supported the global trading system after 1945. The Vietnam War and the government`s refusal of U.S. President Lyndon B. Johnson to pay for it and its Grand Corporation programs through taxation resulted in an increase in outflows of dollars to pay for military spending and widespread inflation, resulting in a deterioration in the U.S. trade balance. In the late 1960s, the dollar was overvalued with its current position, while the German mark and the yen were undervalued; And of course, the Germans and the Japanese did not want to revalue their exports and thus increase them, while the United States tried to preserve its international credibility by preventing devaluation.

[41] Meanwhile, the pressure on government reserves has been exacerbated by new international foreign exchange markets, with their huge pools of speculative capital in search of quick profits. [40] Keynes`s proposals would have created a global reserve currency (which, in his view, could be called “Bancor”) managed by a central bank with the ability to create money and with the power to take much greater action. To strengthen confidence in the dollar, the United States agreed separately to the dollar`s imputation at a rate of $35 per ounce of gold. At this rate, foreign governments and central banks could exchange dollars for gold. Bretton Woods established a dollar-based payment system, which defined all currencies in terms of dollar, even convertible into gold and above all “as good as gold” for trade. The U.S. currency was now effectively the world currency, the standard to which every other currency was bound. Most international transactions have been denominated in U.S. dollars as key currencies around the world. What came out was the “sprayed” monetary system.

Members were required to set a parity of their national currencies in the form of a reserve currency (a “peg”) and to keep exchange rates in a range of plus or minus 1% of parity (a “band”) by intervening in their foreign exchange markets (i.e. in their foreign exchange markets (i.e. when buying or selling foreign money). The agreement did not promote the discipline of the Federal Reserve or the U.S. government. The U.S. Federal Reserve expressed concern about a rise in the domestic unemployment rate due to the depreciation of the dollar.