The Bretton Woods system is a set of uniform rules and guidelines that provide the framework for the establishment of fixed international exchange rates. Essentially, the agreement required the newly created IMF to set the fixed exchange rate for currencies around the world. Each country represented took responsibility for maintaining the exchange rate, with incredibly tight margins above and below. Countries that have difficulty staying within the fixed exchange rate window could ask the IMF for an interest rate adjustment, which would then be the responsibility of all allied countries. The Bretton Woods Agreement was created in 1944 at a conference of all allied nations of World War II. It took place in Bretton Woods, New Hampshire. The Bretton Woods system was implemented to replace more stably the gold standard, according to which all currencies were convertible into gold. Under the new agreement, the dollar was the norm for international transactions, the value of which was set at 1/35 of an ounce of gold. The fact that the United States held a large part of the world`s gold reserves allowed the dollar to assume its new role as the default currency on which trade was based. (b) The Federal Reserve has entered into a number of currency exchange agreements with the central banks of Western Europe, Canada and Japan.

Under these bilateral agreements, a foreign central bank granted reserve loans (in foreign currencies) to the Federal Reserve system in exchange for an equal amount of reserve loans (in dollars). A devastated Britain had little choice. Two world wars had destroyed the country`s main industries, which paid for the import of half of the country`s food and almost all its raw materials except coal. The British had no choice but to ask for help. On the 11. August the British ambassador asked to buy back $3 billion for gold (1/3 of the US gold reserve, Tyler Durden) President Nixon (copy) announced on August 15, 1971: Free trade was based on the free convertibility of currencies. Negotiators at the Bretton Woods Conference concluded, after what they perceived as catastrophic experiences with variable interest rates in the 1930s, that large currency fluctuations could stop the free flow of trade. Despite the disintegration, the Bretton Woods Summit and the agreement are responsible for a number of aspects of particular importance in the financial world. First and foremost, there is the creation of the IMF and the World Bank. .