Did you know? Bretton Woods

Bretton Woods was the 1944 conference in New Hampshire at which 44 countries designed the post-Second World War international financial system. The objective was to forestall the competitive currency devaluations and economic turmoil that had culminated in the Great Depression. 

The conference created the International Monetary Fund and what became the World Bank, and it put the US dollar at the centre of the new order. Other currencies were tied to the dollar, while the dollar itself was convertible into gold. 

Although many countries attended, the United States dominated the negotiations. That mattered because the new system gave Washington unusual influence over the rules of global finance. For the next quarter-century it helped deliver greater monetary stability, stronger trade and a long stretch of post-war growth. 

The Bretton Woods system began to unravel in 1971, when the United States ended the dollar’s convertibility into gold and major currencies gradually moved to floating exchange rates. But its legacy endures. The dollar remains the world’s principal reserve currency, and the institutions created at Bretton Woods — the IMF and the World Bank — still sit near the heart of the global financial system.