Dec 21

Where Did The Agreement Of The Bretton Woods System Happen

Following the collapse of the Bretton Woods system and the liberalization of global financial markets and national financial systems around the world, waves of systemic financial and fiscal crises have been posed. An essential element of integration between financial and financial crises has been the government`s widespread use of bank system debt guarantees.i The pioneering article, It describes the impending disaster that occurred in Chile from 1977 to 1982, after liberalizing its national financial system and opening its capital balance. Chile, like other Latin American countries, has exercised significant controls on the national financial system and capital controls since the 1930s. But even when they appeared after convertibility in 1959, the price of gold was quickly under great pressure. A series of updates followed. These have often been conducted by the major central banks in a new spirit of cooperation. This was supported by the Bank for International Settlements (BIS). The BIS was founded in 1929 with this role in mind, but there were not many signs of collaboration in the 1930s. But in the 1960s, there were more. One of the measures in 1962 was the creation of the Gold Reserve, a cartel that would buy and sell gold to keep its price at 35 ounces. Some random factors such as the increase in the Gold Reserves of the Soviet Union, just when they were needed, helped the pool for some time. But like all cartels, it broke.

This is what happened in 1967/68, when the French were not willing to make another contribution. (The French withdrew in mid-1967 and, at the end of the year, the first signs of difficulties in the London gold market arrived. Private buyers bought gold in the hope that the dollar would fall. The Bank of England was forced to close the gold market on 15 March 1968.) Other measures have been taken in the case of central bank swaps, an instrument designed to allow countries to have short-term funds to defend their exchange rates. Currency swaps had been in operation since the 1920s, but central bank swaps were new. But despite all these DIY attempts, the system continued to struggle and several monetary adjustments were necessary to keep it afloat. But in the end, they were useless. The International Monetary Fund (IMF) has maintained an ”official” classification of exchange rate systems since the collapse of the Bretton Woods system. It is official in the sense that countries declare their exchange rate regimes to the IMF. Since 1999, this classification system has covered eight categories: no separate legal tender; Currency board agreements; Other traditional fixed links horizontal stripes ramp pencils; Crawling strips; managed floating without a pre-announced route for the exchange rate; 19 But the adequacy of the IMF classification system has long been questioned. On the one hand, Frusfeld and Rogoff (1995b) found that countries considered to have fixed exchange rates are rarely bound by the same exchange rate for as long as five consecutive years. On the other hand, Calvo and Reinhart (2002) find that many countries that claim to have floating exchange rates do not.

They often use foreign exchange reserves or interest rates to target exchange rate movements. Despite the disintegration, the Bretton Woods Summit and the agreement are responsible for a number of particularly important aspects in the financial world. First, the creation of the IMF and the World Bank. To date, these two institutions are of paramount importance to the global economy. All the immediate and more or less foreseeable difficulties that occurred after the end of the war, as well as some exogenous and unexpected problems, meant that it was impossible for the IMF to behave as planned.

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