certain range of professionals knows that long before there was the Bretton Woods system, the planet was the time of the gold standard, when the pound could be freely exchanged for gold.Britain at that time was a strong world power, so could afford such operations.But everything changed in 1914, when the period of the 1st World War in the financial arena came the US currency, which has spread in North and Latin America.
in 1922 was an attempt to create a reserve currency and the gold standard on the basis of the pre-war model.In 1925, England introduces the gold standard for pound, secured gold and the reserve currency (US dollars).However, in 1929 in the United States collapsed on the stock exchange, and in 1931 the London financial market started to panic, which finally took the pound secondary role after the dollar.In 1931, 1933 in the UK and the USA respectively were abolished the gold standard, that is,Exchange rates began to float, which served as the basis for future forex systems.Attempts to create the gold convertibility of currencies collapsed by European countries (in 1936, the collapse of the "Golden Block", which included a number of countries, including France, the Netherlands and others.).
By the end of the forties of the 20th century due to the financial crises of the thirties and World War II, in the world there is a need for drastic renovation of the financial system.And in this regard in 1944 it was called the Bretton Woods conference at which it was decided to peg to the dollar in 44 countries, and the dollar - gold at the rate of 35 dollars per troy ounce (31.1034 grams).After World War II, the US became the dominant share of the world's gold, which gave the country a base for world leadership.In December 1944, the Bretton Woods system began its work.
at the conference in 1944 was made provision for the establishment of the two organizations, which will carry out monitoring functions and to provide the countries - participants of the agreement means for the stabilization of the national currency.It was the International Monetary Fund and the International Bank for Reconstruction and Development.The Bretton Woods system assumes that the final vehicle in international payments remains the gold that national currencies are freely traded, that national currencies have a fixed rate to the dollar, and the central banks supported this course (+ - 1 percent).
However, by the mid 70's gold reserves were redistributed to other financial centers (Europe, Asia), and thus was broken Triffin's theorem that the issue of currency should be weighed against the gold reserves of the country, which has made this issue.The Bretton Woods system began to lose its relevance, which intensified speculation, volatility of foreign exchange balances of the participating countries, the currency crisis in 1967.This creates the preconditions for change of the existing world monetary system, the US has for many years maintained by force of arms, asgold reserve, equivalent to the emission of dollars from them for many years there.
