Bretton Woods Agreements

The Bretton Woods Agreements were negotiated at the United Nations Monetary and Financial Conference held at the Mount Washington Hotel in Bretton Woods, New Hampshire, from 1 to 22 July 1944. Delegates from 44 Allied nations met to design the post-war international economic order, motivated by a shared belief that the competitive devaluations, capital controls, and trade blocs of the 1930s had contributed to the Great Depression and the slide into war.

Two institutions emerged from the conference:

• The International Monetary Fund (IMF), tasked with overseeing exchange-rate stability and providing short-term balance-of-payments assistance.
• The International Bank for Reconstruction and Development (IBRD), now part of the World Bank Group, originally intended to finance post-war reconstruction and later development lending.

The negotiations were dominated by two rival blueprints: the British plan associated with John Maynard Keynes, which proposed an international clearing union and a synthetic reserve currency called the bancor; and the American plan drafted by Harry Dexter White at the US Treasury. The American plan prevailed, reflecting US economic dominance.

The resulting monetary system pegged member currencies to the US dollar at fixed but adjustable rates, with the dollar convertible into gold at $35 per ounce. Members could alter their pegs only in cases of "fundamental disequilibrium" and with IMF consent.

The Articles of Agreement entered into force on 27 December 1945 after ratification by the required number of states. A proposed third pillar, the International Trade Organization, was never ratified by the US Senate; its functions were partially filled by the 1947 GATT and eventually the WTO in 1995.

The fixed-rate system collapsed when President Richard Nixon suspended dollar-gold convertibility on 15 August 1971 (the "Nixon shock"), and the Jamaica Accords of 1976 formally legitimized floating exchange rates. The IMF and World Bank, however, remain central to global financial governance.