BRETTON

AGREEMENT
Presented by group 3
Ancheta, Alcoba , Carlos and Matthew
 WHAT IS THE
BRETTON WOODS
AGREEMENT
 The Bretton Woods
Agreement is the
landmark system for
monetary and exchange
rate management
established in 1944 after
the world war 2.
It was developed at the United
Nations Monetary and Financial
Conference held in Bretton
Woods, New Hampshire,
currencies were pegged to the
price of gold, and the U.S. dollar
was seen as a reserve
currency linked to the price of
gold.
Source:https://www.investopedia.com/terms/b/brettonwoodsagreement.asp
“ALL CURRENCIES ENDED UP
TO DOLLAR AND DOLLAR
CONNECTS TO GOLD”
SETTING UP THE
BRETTON WOODS
AGREEMENT
Delegates from 44 countries met to
create a new international monetary
system. The main goals of the
meeting of the 730 delegates were to
ensure a foreign exchange rate
system, prevent competitive
devaluations and promote economic
growth.
TWO INTERNATIONAL
INSTUTION CREATED
DURING THE BRETTON
AGREEMENT
 INTERNATIONAL MONETARY FUND
(IMF) - suppose to lend countries that
cannot find in any other resources

 INTENATIONAL BANK FOR

RECONTRUCTION AND
DEVELOPMENT (WORLD BANK) –
suppose to help less develop country grow
In 1958, the Bretton Woods system became
fully functional. This happened as
currencies became convertible. In order to
convert currencies, countries settled their
international balances in dollars, while
U.S. dollars were fully convertible to gold.
The exchange rate applied at the time was
$35/ounce. Keeping the price of gold fixed
and adjusting the supply of dollars was
the responsibility of the United States.
 FAIL OF BRETTON
WOODS AGREEMENT
 “THE UNITED STATES KEPT RUNNING
DEFICITS TO FUND VARIOUS PROJECTS
SO THE AMOUNT OF DOLLARS IN
EXISTENCE KEEP INCREASING AND THE US
GOLD RESERVE KEEP DECREASING”
 The Bretton Woods Agreement was dissolved
between 1968 and 1973. An overvaluation of the
U.S. dollar led to concerns over the exchange
rates and their tie to the price of gold. President
Richard Nixon called for a temporary suspension
of the dollar’s convertibility. Countries were then
free to choose any exchange agreement, except
the price of gold. In 1973, foreign governments let
currencies float, which put an end to the Bretton
Woods system.

Source:https://www.investopedia.com/terms/b/brettonwoodsagreement.asp
HOW IS THE EXCHANGE
RATE DETERMINED?
Under the system of freely floating exchange rates,
the value of all major currencies in terms of the
peso, like any commodity or service being sold in
the market, is determined by the forces of supply
and demand. Under a fixed exchange rate
system, a par value rate is set between the peso
by the central bank. The par value may be
adjusted from time to time.

Source; http://www.bsp.gov.ph/downloads/Publications/FAQs/exchange.pdf