chapter  23
8 Pages

The rise and fall of the Bretton Woods System

ByBarry Eichengreen

The Bretton Woods System is also too easily confused. For some the term “Bretton Woods System” connotes the international monetary institution, the International Monetary Fund, created as a result of the Bretton Woods negotiations, and the regime of pegged but adjustable exchange rates that it helped to oversee from the late 1940s through the early 1970s. Others use the label to denote something more specific: a system in which countries kept their currencies stable and also maintained convertibility for international transactions on current account – something that was done by more than a small handful of countries only from the beginning of 1959. Still others mean something broader: a system or order involving not just stable exchange rates but also an open trading system and a social compact in which capital and labor agreed to suppress distributional conflicts in order to share the fruits of growth.