What is the Bretton Woods Agreement?
Definition of Bretton Woods Agreement: This agreement was signed in 1944. This agreement outlined the rules for a monetary system. It uses the cost of gold for fixing the exchange rates for main currencies. The accord was invented after the Second World War by the Great Britain and U.S. This agreement established a permanent exchange rate associated with the dollar with the other countries attaching their money to dollar. It made the Monetary Fund also known as IMF and the IBRD. IBRD is regarded as a forerunner of the World Bank. By 1970, the exchange rate started collapsing. The Bretton system finished on 15th August in 1971 when the President Richard Nixon finished gold trading at the fixed cost of about thirty five dollar per ounce. It was restored in the year 1971 by a balanced exchange rate system.