Bretton Woods Agreement (6 of 8)

What did Bretton Woods establish?

- A new monetary system - replaced gold standard with the US dollar as the global currency (which established America as the dominant lower in the world economy) - America was only country with ability to *print dollars*

Bretton Woods system gave nations...

- more flexibility than a strict adherence to the gold standard. - provided less volatility than the currency system with no standard at all

The agreement created the ...

-World Bank -International Monetary Fund - these 2 .org, would monitor the new system

When was it established?

1944

When did the Bretton Woods system collapse?

1973 - (1971: US suffered from "massive stagflation": combination of inflation and recession)

Countries promised...

That their central banks would maintain fixed exchange rates between their currencies and the dollar HOW? if a country currency value became *WEAK* relative to the dollar, the bank would buy up its currency in foreign exchange markets——it would lower the currency's supply and raise its price. If currency became to *HIGH*, the bank would print more——which would increase the supply and lower its price