The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Bretton Woods System

  • Peter B. Kenen
Reference work entry


Under the Bretton Woods System, created after the Second World War, each country had to peg its currency to gold or to the US dollar, but it could obtain temporary financing from the International Monetary Fund. In practice, countries pegged their currencies to the dollar and accumulated dollar reserves, which they could use to buy gold from the US Treasury. This regime served to finance US payments deficits but prevented the United States from changing its exchange rate. The system was undermined when other countries’ dollar holdings came to exceed US gold holdings. It was abandoned in 1973, when the major industrial countries let their currencies float.


Bancor Bank of England Bretton Woods System Capital controls Convertibility Devaluation Exchange rate stability Fixed exchange rates Floating exchange rates Foreign-exchange market Gold exchange standard Gold standard International Monetary Fund Keynes, J. M Nixon, R Nurkse, R Reserve currency Special Drawing Rights Trade unions Triffin, R White, H 

JEL Classification

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Peter B. Kenen
    • 1
  1. 1.