Editor's Pick

ON 1 JULY 1944, over seven hundred delegates from 44 countries gathered in New Hampshire, in the United States, for the United Nations Monetary and Financial Conference, which came to be known as the Bretton Woods conference. All 44 countries were allied during the Second World War, still ongoing at the time. The delegates deliberated for 22 days, leading to the establishment of the International Bank for Reconstruction and Development, to provide long-term capital to countries in need of foreign aid, and the International Monetary Fund, to stabilise exchange rates. The IBRD would go on to become one of the five constituent bodies of the World Bank.

Among the people who played a leading role in the negotiations was John Maynard Keynes—seen here at the Mount Washington Hotel, which hosted the conference. Keynes, who represented Britain, was in favour of a common currency for global trade, along with a world central bank and an international clearing union, which would serve as the conduit for countries to trade with each other. The World Bank and the IMF would take on the two latter roles. Their founding was influenced more by the United States than by Keynes’s ideas.

The IMF was tasked with supervising a gold standard pegged to a stable currency, namely the US dollar. The US treasury linked the dollar to gold and agreed to buy or sell gold to other governments at $35 per ounce. The dollar thus became the currency used for trade by countries that accepted the Bretton Woods system until August 1971, when the US president Richard Nixon ended the arrangement by refusing to sell gold at the stipulated rate. In 1976, the Jamaica Accords ratified changes to the Articles of Agreement of the IMF, delinking the dollar from gold and effectively ending the Bretton Woods system.