The Bretton Woods System was adopted in 1944 after 44 countries signed the Bretton Woods Agreement which became functional in 1958. Under the system, the US Dollar was fixed/pegged to gold while all the other currencies were pegged to the US Dollar. During this time, the countries followed a fixed exchange rate system. The Bretton Woods Agreement also led to the creation of the International Monetary Fund and the World Bank. The system came to an end in the 1970s when the US President Richard Nixon decided to stop pegging the USD to gold which consequently created the current free-floating exchange rate system.
« Back to Glossary Index