ABSTRACT
After the Second World War, the Western world, led by the USA, instituted a gold exchange standard where both gold and foreign exchange were used as world monies. We examine the negotiations over the new system culminating in the Bretton Woods Treaty establishing the International Monetary Fund. We then trace the history of the IMF and the Bretton Woods system until the latter’s collapse in 1971. Over its lifetime the gold exchange standard was revealed to have critical shortcomings in both theory and practice; these are examined in section 28.3.
