Agreement At Bretton Woods

The fact that the United States held the majority of the world`s gold reserves allowed the dollar to assume its new role as the standard currency on which the stock exchanges were based. The Bretton Woods Agreement of 1944 established a new global monetary system. It replaced the gold standard with the US dollar as the world currency. In this way, it established America as a dominant power in the global economy. After the agreement was signed, America was the only country capable of printing dollars. The Bretton Woods system is a set of uniform rules and guidelines that have provided the framework for the establishment of fixed international exchange rates. Essentially, the agreement invited the newly created IMF to set the fixed exchange rate of the world`s currencies. Each country represented has taken responsibility for maintaining the exchange rate, with incredibly narrow margins above and below…