The paper "The Most Important Features of the Bretton Woods Agreement" is a perfect example of a business assignment. When World War II was over, the Bretton Woods System was the successor of the gold standard monetary system (Orin Kirshner, 1996). The International Monetary Fund (IMF) – This IMF has had a responsibility of supervision over the policies and rules of a new fixed exchange rate regime and also had to ensure that stability of other countries was maintained thus promoting foreign trade (Uzan, 1996). Also the World Bank was created as part during the comprehensive plan for starting a new IMS. The U. S dollar turned out to be the only currency supported by gold, after it reinstated gold as the vital convertibility standards for currencies all over the world (Kim, 2011). During the agreement, there was the establishment of an exchange rates system which was fixed on the modifiable peg system-Here, there were gold fixed dollars whereby, the fixed rates were relatively expressed to the dollar since the rates of exchange were fixed and not favoring the gold (Orin Kirshner, 1996).
Sterling was pegged from 1949 to 1967 at two points eight.
During this time the involved countries were grateful to interfere with the markets of foreign exchange hence maintain the authentic rates at one percent of the two-point eight. The IMF rules permitted the governments to modify the pegged rate- Pegging of a currency is connected to stability, mostly in the urbanizing countries whereby a country may come up with a decision of pegging its currency thus creating a constant impression for foreign investment (Michael D. Bordo, 2003). In addition, investors having a peg are able to know their investment values are thus reducing worries about the daily fluctuations.
When currencies are pegged, inflation rates are lowered thus generating demand due to high confidence in currency stability (Primer, 2003). This was done to cause an effect of either devaluing or revaluing the currency, if and if only when the country experienced surplus or deficit on balance of payments of an elementary nature.
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