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Why Was The Bretton Woods Agreement Signed

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. A devastated Britain had little choice. Two world wars had destroyed the country`s main industries, which paid for the import of half of the food and almost all of their raw materials, except coal. The British had no choice but to ask for help. In 1945, the United States agreed on a $3.8 billion loan. In exchange, tired British officials promised to negotiate the deal. The agreement also created the World Bank and the International Monetary Fund, which continue to play an important role in the global economy, and provided loans to countries in need of assistance in growing their economies. The intent of the SDR system was to prevent nations from buying coupled dollars and selling them at higher market prices and to give nations a reason to hold dollars by crediting interest, while setting a clear limit on the amount of dollars that could be held.

The main conflict was that the American role of military defender of the economic system of the capitalist world was recognized, but had no specific monetary value. In fact, other nations have “purchased” U.S. defense policy by imposing a loss of dollars. They were only prepared to do so as long as they supported American military policy, because of the Vietnam War and other unpopular actions, pro-US fighters. Consensus has begun to evaporate. The SDR agreement actually monetized the value of this relationship, but did not create a market for it. A devastated Britain had little choice. Two world wars had destroyed the country`s main industries, which paid for the import of half of the food and almost all of its raw materials except coal. The British had no choice but to ask for help. It was only when the United States signed a 4.4 billion pound British aid agreement on 6 December 1945 that the British Parliament ratified the Bretton Woods Agreements (which took place later in December 1945). [24] Financial crises during the U.S.

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