Abstract
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.
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Kenen, P.B. (2018). Bretton Woods System. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2669
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2669
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