Bretton Woods Agreement Ppt

13 History The U.S. current account balance was relatively balanced until the collapse of the Bretton Woods Agreement. In the mid-1980s, the current account deficit reached 3% of GDP. The plaza agreement between Germany, France, Japan, the United States and the United Kingdom attempted to correct the U.S. current account deficit by depreciating the dollar against the yen and the German mark through coordinated policy changes. In 2006, the highest current account deficit was 6% of GDP. 15 Foreign political central banks buy dollar assets to keep the dollar relatively high against their currencies, boost exports and create jobs. One example is that China is keeping its currency low against the dollar, in order to maximize exports, as Chinese imports will be relatively cheaper. Oil also exacerbates the current account deficit when prices rise. Relatively low interest rates over the past 10 years have encouraged Americans to consume more and save less. 8 results: dollar hegemonyThe finally led to that the United States, the most powerful nation in the world, assumed responsibility as global monetary manager 1) The United States has maintained an open market for imports and trade 2) long-term loans and subsidies granted to other nations via the Marshall Plan and other aid programs 3) established a liberal credit policy for short-term funds in times of crisis soon , the gold stock market standard becomes the dollar exchange standard 3 pre-conference events of market practices that causes devaluation, deflation and depression that defines the economy of the 1930s. World War II Gold Standard 5 Conference Objectives To regulate legal rules and obligations (by IMF) A standard for exchange rates Set a standard for international monetary cooperation Member States can ultimately borrow funds based on policies and preferences as the most powerful member , American politicians did not want the floating exchange rates of the 1930s and they did not want their money to the gold standard Five Money Systems. Unit 6 Vocabulary Account Exchange Bond Capital Project Commercial Invoice Credit Terms Currency Future Electronic.

7 Problems after the war Monetary relations were unstableThe member countries underestimated the strength of their means… After two years of credit, the IMF was deprived of leonard Seabrooke Theories and Issues` money in International Political Economy.

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