Which Of The Following Was A Factor In The Collapse Of The Bretton Woods Agreement

Wolff (2013) [4] provides details in his article about another structural failure to support the view of the structuralists: conflicting sovereign objectives. Wolff argues that the conflicting sovereign objectives and the own interests of the conference`s great powers, Britain and the United States, led to decolonization that was one of the system`s main problems in the 1960s. From 1947 to 1958, the United States deliberately encouraged outflows of dollars, and from 1950 the United States ran a balance-of-payments deficit in order to provide liquidity to the international economy. The dollars passed through various U.S. aid programs: the Truman Doctrine, which included aid to the pro-U.S. The Greek and Turkish regimes, which fought to suppress the communist revolution, helped several pro-American supporters. Regime in the Third World and, above all, the Marshall Plan. From 1948 to 1954, the United States provided $17 billion in grants to 16 Western European countries. In 1971, fearing that the U.S. gold supply would no longer be sufficient to cover the number of dollars in circulation, President Richard M.

Nixon devalued the U.S. dollar against gold. After a race to the gold reserve, he declared a temporary suspension of the convertibility of the dollar to gold. By 1973, the Bretton Woods system had collapsed. Countries could then choose any foreign exchange agreement for their currency, with the exception of the attachment of their value to the price of gold. They could, for example, link their value to another country`s currency or a basket of currencies, or simply let them float freely and allow market forces to determine their value against the currencies of other countries. Chart 4 shows the change in the exchange rate from the euro to the USD (1 euro to usd) from 1953 to 1971, which includes the last period of the Bretton Woods system, as problems, and the three-dollar crisis of the United States. As the graph shows, the exchange rate fell rapidly from about 0.99 to about 0.95 during the first dollar crisis in 1960.

The second dollar crisis, in 1968, and the third in 1971, just before the collapse of the Bretton Woods system, continued to decline. The agreement also facilitated the creation of very important financial structures: the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), now known as the World Bank.

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