Question

What were the three major results of the Bretton Woods conference?

Short answer

Answer: The three major results of the Bretton Woods conference were the establishment of the International Monetary Fund (IMF), the creation of the World Bank, and the implementation of the gold-exchange standard. The IMF aimed to ensure the stability of the international monetary system, the World Bank provided financial and technical assistance to developing countries, and the gold-exchange standard helped maintain exchange rate stability, promoting global trade and economic growth.

Step-by-step solution

Introduction to Bretton Woods conference

The Bretton Woods conference, officially called the United Nations Monetary and Financial Conference, was held in 1944 in Bretton Woods, New Hampshire, United States. Representatives from 44 allied nations came together to establish a new post-World War II international monetary system to foster economic growth and stability throughout the world.

Result 1: Establishment of the International Monetary Fund (IMF)

The first major result of the Bretton Woods conference was the creation of the International Monetary Fund (IMF). The IMF's primary purpose was to ensure the stability of the international monetary system by monitoring exchange rates and lending financial resources to countries facing balance-of-payment problems. This would help nations avoid disruptive currency devaluations and maintain stable exchange rates, which would promote international trade and economic growth.

Result 2: Creation of the World Bank

The second major result of the Bretton Woods conference was the establishment of the World Bank, initially called the International Bank for Reconstruction and Development (IBRD). The World Bank's main objective was to provide financial and technical assistance to developing countries for development projects, such as building infrastructure, promoting economic growth, and reducing poverty. By assisting in the economic development and reconstruction of war-torn countries, the World Bank aimed to promote global economic stability and well-being.

Result 3: Implementation of the gold-exchange standard

The third major result of the Bretton Woods conference was the implementation of a new monetary system called the gold-exchange standard. Under this system, the U.S. dollar was pegged to gold at a fixed exchange rate of \$35 per ounce, while other currencies were pegged to the U.S. dollar at fixed exchange rates. This system aimed to prevent large fluctuations in currency values and maintain exchange rate stability, thereby fostering global trade and economic growth. The gold-exchange standard prevailed until 1971, when the United States abandoned the system and allowed the U.S. dollar to float against other currencies.