JIS News

Prime Minister Bruce Golding has said that the Bretton Woods agreement needs to be revised, in order to address economic problems currently affecting the world, particularly developing countries.
Speaking in an interview with JIS News at the Norman Manley International Airport on May 25, on his return from the United Kingdom (UK), where he met with Prime Minister Gordon Brown, Mr. Golding said: “We feel that the arrangements that were made coming out of the Bretton Woods agreement after the 1940s, need to be revised, need to be restructured to deal with the current realities of the world, particularly the challenges that face developing countries.”
The Prime Minister said he had “a very useful meeting” with the Prime Minister, “working with him to get some consensus on a review of the multi-lateral institutions.”
The Bretton Woods Agreement was established as a post-war (World War II) international monetary system of convertible currencies, fixed exchange rates and free trade.
In order to rebuild the international economic system, following the war, 730 delegates from 44 nations, deliberated on and signed the Bretton Woods Agreement during the first three weeks of July, 1944, at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. The delegates also met to discuss the postwar recovery of Europe as well as a number of monetary issues, such as unstable exchange rates and protectionist trade policies. The agreement was also aimed at preventing currency competition and promoting monetary co-operation among nations.
Also out of those negotiations, a system of rules, institutions and procedures were set up to regulate the international monetary system, and as such, two international institutions, the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) (now one of five institutions in the World Bank Group), were established. The intention was to provide economic aid for reconstruction of post-war Europe. These organizations became operational in 1946 after a sufficient number of countries had approved the agreement.
Under the agreement, each country was obligated to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value – plus or minus one per cent – in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. However, in the face of increasing strain, the system collapsed in 1971, following the United States suspension of convertibility from dollars to gold.
The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states, and established the rules for commercial and financial relations among the world’s major industrial states.
Until the early 1970s, the Bretton Woods system was effective in controlling conflict, and in achieving the common goals of the leading states that had created it, especially the United States.