What is the Bretton Woods system? Please advise

The Bretton Woods monetary system refers to the international monetary system centered on the US dollar after World War II, and the core content is as follows.

The core contents of the Bretton Woods system are: (1) the establishment of the International Monetary Organization, which conducts joint consultations on monetary affairs in the international arena and provides credit support for the short-term balance of payments deficits of member countries; (2) The U.S. dollar is pegged to **, and the currencies of member countries are pegged to the U.S. dollar, and an adjustable fixed exchange rate system is implemented; (3) Abolition of foreign exchange controls on current account transactions.

In July 1944, representatives of major Western countries established the system at the United Nations International Monetary and Financial Conference, which was called the "Bretton Woods System" because the conference was held in Bretton Woods, New Hampshire, USA. The GATT complements the 1944 Bretton Woods Conference and, together with the agreements adopted at the Bretton Woods Conference, are collectively referred to as the "Bretton Woods system".

That is, the multilateral economic system with foreign exchange liberalization, capital liberalization and liberalization as the main content, constitutes the core content of the capitalist bloc. The establishment of the Bretton Woods system promoted the recovery and development of the post-war capitalist world economy. Due to the frequent outbreaks of the dollar crisis and the US economic crisis, as well as the inextricable contradiction of the system itself, the system was declared closed by Nixon on August 15, 1971.

1. A "double peg" international monetary system centered on the US dollar has been formed, that is, the US dollar is pegged to **, and the currencies of other countries are pegged to the U.S. dollar.

2. Establish a permanent international financial organization - the International Monetary Fund (IMF).

3. The US dollar is the main international reserve asset, and the US dollar - ** standard system is established.

4. The International Monetary Organization (IMO) provides short-term financing to member countries with deficits in the balance of payments.

The International Monetary Agreement** stipulates that the exchange rate of national currencies against the United States dollar may only fluctuate within 1 per cent of the legal exchange rate. If the market exchange rate fluctuates by more than 1% of the legal exchange rate, each country** is obliged to intervene in the foreign exchange market to maintain the stability of the exchange rate. Approval by the International Monetary Organization is required if the change in the statutory exchange rate of a Member State exceeds 10 per cent.

In December 1971, the range of this spot rate change was broadened to the upper and lower ranges, and the criterion for determining "parity" was changed from ** to Special Drawing Rights. This exchange rate system of the Bretton Woods system is known as the "adjustable peg exchange rate system".

The essence of the Bretton Woods system was to establish an international monetary system centered on the dollar. Its basic content is that the US dollar is pegged to **, and the currencies of other countries are pegged to the US dollar, and a fixed exchange rate system is implemented.

The Bretton Woods system provides for the use of ** as the basis and the US dollar as the key international reserve currency. The specific method is: the US dollar is pegged to **, and the official price of ** is determined to be equivalent to $35 for 1 ounce**.

Countries**or**banks have the right to exchange U.S. dollars for the U.S. at the official rate** at any time. Other currencies are pegged to the US dollar, i.e. countries determine the gold parity of their currencies against the US dollar and are obliged to maintain a fixed exchange rate against the US dollar. Once confirmed, the parity cannot be changed at will, and its fluctuation range must be maintained within the range of 1% of the currency parity.

Failure Revelation

It has been used as a means of payment for a long time, and it is precisely because of the small production and non-replication that it is more reassuring to use it as a means of payment, and the collapse of the Bretton Woods system has nothing to do with it, at that time, it was not directly linked to the currencies of various countries, and the problem should be that it is a currency that can be used for exchange, that is, the US dollar is overissued and cannot support the dollar-gold swap, which has led to the chaos and collapse of the system.

Root cause. The fundamental reason for the collapse of the dollar-centered international monetary system is the inextricable contradictions in the system itself. Under this system, the US dollar functions as a world currency as an international means of payment and an international means of reserves.

On the one hand, as an international means of payment and a means of international reserves, the value of the US dollar is stable, and other countries will accept it.

The stability of the value of the US dollar requires the United States to have sufficient reserves, and the United States must maintain a surplus in the balance of payments, so that the United States will continue to flow into the United States and increase its reserves. Otherwise, people wouldn't have accepted dollars in international payments.

On the other hand, in order for the world to obtain sufficient foreign exchange reserves, the United States must maintain a large deficit in the balance of payments, otherwise the world will face a shortage of foreign exchange reserves and a shortage of international means of payment in international circulation channels. As the U.S. deficit increases, the dollar's ** guarantee will continue to decrease, and the dollar will continue to depreciate. The transition from a shortage of dollars to a flood of dollars after the Second World War was the inevitable result of this contradictory development.

The "Bretton Woods system" refers to the post-World War II dollar-centric international monetary system. In July 1944, representatives of major Western countries established the system at the United Nations International Monetary and Financial Conference, which was called the "Bretton Woods System" because the conference was held in Bretton Woods, New Hampshire, USA. ”

The system implements a direct peg between the US dollar and the first and the fixed exchange rate system, which laid the foundation for the post-World War II international financial order, and for a considerable period of time after the war, it did bring about an era of unprecedented international development and the increasing interdependence of the global economy. But in the sixties and seventies of the last century, after several dollar crises, the system gradually collapsed. But the two institutions born from the Bretton Woods Conference — the World Bank and the International Monetary Organization — continue to play a crucial role in the world** and financial landscape.

The collapse of the Bretton Woods system.

In 1944, the world agreed on exchange rates in Breton, New Hampshire, USA, and formed the International Monetary Organization, while also starting a series of post-World War II recovery plans for the European economy. The conference established the Bretton Woods system, the post-World War II dollar-centered international monetary system, which guaranteed the stability of the world economy for nearly 30 years to come.

As for the current financial crisis, Trichet blames the lack of effective regulation of markets after the collapse of the Bretton Woods system. In 1971, the Bretton Woods system collapsed due to the failure of the dollar and its pegg, and the era of floating exchange rates was announced. "The collapse of the Bretton Woods system can actually be interpreted as a denial of the orderliness of financial markets.

Trichet said.

From the collapse of the gold standard in the thirties to the end of the Second World War, the chaos and turmoil in the international monetary system seriously undermined the interests of all countries in the world. In order to put an end to this situation as soon as possible, in 1941, under the impetus of the United States, Britain and other countries, efforts to rebuild the international monetary system began, and the result of the efforts was that four years later, a meeting of 44 countries was held in Bretton Woods, New Hampshire, the United States, and the "International Monetary Agreement" based on the "White Plan" of the United States was adopted, and the Bretton Woods system with a global fixed exchange rate system was announced.

Behind the introduction of the Bretton Woods system was actually a struggle for the dominance of the British and American currencies. The end result is that the lease-bridge system essentially gives the United States almost a monopoly on the right to set the rules of the game and revise the financial field.

The characteristics of the system are:

International reserves are no longer only **, but ** and the US dollar;

The U.S. dollar became the only major reserve asset;

The U.S. only allows foreign countries** to exchange U.S. dollars to the U.S. under certain conditions**, and does not allow foreign residents to exchange U.S. dollars to the U.S.**;

The International Monetary Organization (IMO) has become the central mechanism for the normal functioning of the international monetary system.

The Bretton Woods system in its purest sense lasted only a little more than a decade.

<> First, let's start with the first question:

The Bretton Woods system was established in 1944. In July 1944, representatives of major Western countries established the system at the United Nations International Monetary and Financial Conference, which was later called the "Bretton Woods System" because the conference was held in Bretton Woods, New Hampshire, USA.

And after this meeting, a General Agreement on Tariffs was issued to supplement the content of the conference. Since then, the General Agreement on Tariffs, together with the agreements adopted at the Bretton Woods Conference, has been referred to as the "Bretton Woods system". The core content is the multilateral economic system with foreign exchange liberalization, capital liberalization and liberalization as the main content, constituting a capitalist bloc.

Second, let's talk about the second question. The provisions of the Bretton Woods system are as follows:

The first is to directly peg ** to the US dollar. Second, the national currencies of other countries should be pegged to the US dollar. The third is the implementation of an adjustable fixed exchange rate, and the adjustment is very small.

Fourth, the currency convertibility and international payment and settlement principles of various countries. Fifth, the US dollar has become the main international reserve currency in the foreign exchange reserves of various countries.

3. Now let's talk about the third question. There are many reasons for the collapse of the Bretton Woods system, as follows: First, the relative decline in the status of the dollar, the rapid economic growth of other countries after World War II, the dollar is no longer far ahead, and the gap with other countries has narrowed, so the Bretton Woods system will be loosened.

Second, the United States has insufficient reserves, the United States launched the Korean and Vietnam wars one after another, military spending has increased sharply, and the fiscal deficit is huge, and it has to rely on the issuance of currency to make up for it, resulting in increased domestic inflation; In addition, the rise of the economic index of Western Europe and other countries, all kinds of goods and services continue to be quietly imported into the United States, resulting in the United States balance of payments deficit year after year, the continuous reduction of reserves, a large outflow of dollars, and a surplus of dollars in the international market, which makes the dollar exchange rate bear a huge impact, and the fixed exchange rate system is in danger.

Fourth, the last fourth question:

The replacement of the Bretton Woods system is the Jamaican system. The main contents include: First, the reform of the floating exchange rate system has been implemented, and the legalization of the floating exchange rate system has been formally confirmed.

The second is to implement the first non-monetization. The agreement made a decision to gradually withdraw ** from the international currency. The third is to enhance the role of the Special Drawing Right.

Fourth, increase the share of member countries. Fifth, expand credit lines to increase financing for developing countries.