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April 10th, 2021

Members Of Bretton Woods Agreement

In 1971, more and more dollars were printed in Washington, D.C., and then injected abroad to pay for government spending on the military and social program. In the first six months of 1971, assets fled the United States for $22 billion. On August 15, 1971, Nixon responded under the Economic Stabilization Act of 1970 to Executive Order 11615, which unilaterally introduced 90-day wage and price controls, a 10% increase in imports and, most importantly, “closed the golden window,” making the dollar directly convertible into gold, off the open market. It is unusual that this decision was taken without consultation with members of the international monetary system, or even its own Foreign Ministry, and that it was soon called a Nixon shock. In May 1971, West Germany left the Bretton forest system. Switzerland cashed in $50 million for gold. In early August 1971, France sent a warship into New York Harbor and received US$191 million in gold (Huffington Post). On August 11, 1971, the British ambassador requested the cashing of $3 billion for gold (1/3 of the U.S. Gold Reserve, Tyler Durden), as announced by President Nixon (copy) on August 15, 1971: the main objective of the conference was to reach an agreement on the IMF. There was sufficient consensus that the conference could also reach agreement on the IRD.

To do so, the conference had to be extended from July 19, 1944 to July 22. The United States launched the Marshall Plan for the economic recovery of the European Union in order to provide significant financial and economic assistance to the reconstruction of Europe, largely through subsidies rather than loans. The member countries of the Soviet bloc, for example. B Poland, were invited to receive the subsidies, but obtained a favorable agreement with the COMECON of the Soviet Union. [31] In a speech at Harvard University on June 5, 1947, U.S. Secretary of State George Marshall stated that the IMF had attempted to provide for exchange rate adjustments on occasion (a change in the face value of a member) by an international agreement. Member States have been allowed to adjust their exchange rates by 1%. This trend has been to restore the balance of trade by increasing exports and reducing imports. This would only be permissible if there was a fundamental imbalance. A depreciation of a country`s money was described as a devaluation, while an increase in the value of the country`s money was described as an appreciation. There is no provision in the agreement for the establishment of international reserves.

It expected that a new gold production would suffice. In the event of a structural imbalance, it expected national solutions, such as adjusting monetary value or improving a country`s competitive position by other means. However, the IMF had few resources to promote such national solutions. The agreement created the World Bank and the International Monetary Fund (IMF), U.S.-backed organizations, to oversee the new system. Preparations for the reconstruction of the international economic system during World War II were still underway, 730 delegates from the 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference.

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