Bretton Woods System
Definition of Bretton Woods System
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid-20th century. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
Examples of Bretton Woods System in the following topics:
- The move had momentous consequences for the system of international financial exchange, and in turn, other nation's economies.
- End of the Bretton Woods System By 1971, the American money supply (the total number of dollars available in the economy) had increased by 10%.
- Meanwhile, European countries began leaving the Bretton Woods international financial system, which had based the value of foreign currencies on the value of the gold-backed dollar.
- In May 1971, inflation-wary West Germany was the first member country to unilaterally leave the Bretton Woods system — unwilling to devalue the Deutsche Mark in order to prop up the dollar.
- On August 9, 1971, as the dollar dropped in value against European currencies, Switzerland unilaterally withdrew the Swiss franc from the Bretton Woods system.
- These policies precipitated the Nixon Shock and essentially ended the Bretton Woods system of international financial exchange, in place since the end of World War II.