Bretton Woods system facts for kids

The Bretton Woods system was an important plan created after World War II. It was the first time countries worked together to manage how their money was valued against each other. Under this system, each country agreed to keep the value of its money (its currency) stable. This was done by linking its value to gold at a set price, with only a tiny bit of wiggle room.

This system also created the International Monetary Fund (IMF). The IMF was set up to help countries if they had problems paying for things they bought from other nations. The Bretton Woods system was the first big agreement that organized how independent countries would handle their money matters with each other. It set up clear rules for how countries would trade and manage money across borders.

How the System Started

Plans to rebuild the world's economy after World War II began even before the war ended. In July 1944, 730 representatives from all 44 countries that were Allies of World War II met in Bretton Woods, New Hampshire, USA. This meeting was called the United Nations Monetary and Financial Conference.

During these three weeks, the delegates talked about and then signed the Bretton Woods Agreements. These agreements created a set of rules, organizations, and ways of working together to manage money around the world.

Important Organizations

The planners at Bretton Woods created two very important organizations:

• The International Bank for Reconstruction and Development (IBRD), which is now part of the World Bank Group.
• The International Monetary Fund (IMF).

These organizations officially started in 1946 after enough countries had agreed to the plan.

Why the System Ended

The Bretton Woods system worked well for about 25 years, until the early 1970s. It helped prevent money problems between countries and achieved the goals of the main countries that created it, especially the United States.

However, in 1971, the system faced big challenges. The United States decided it would no longer let other countries exchange their dollars for gold. This decision caused the entire system to collapse.

Images for kids

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  Cordell Hull, U.S. Secretary of State from 1933 to 1944.

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  President Roosevelt and Prime Minister Churchill during their secret meeting in August 1941 in Newfoundland. This meeting led to the Atlantic Charter.

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  John Maynard Keynes (right) and Harry Dexter White at the first meeting of the International Monetary Fund's Board of Governors in 1946.

See also

In Spanish: Acuerdos de Bretton Woods para niños