Bretton Woods system
The Bretton Woods system was the post–Second World War international monetary order designed at a 1944 conference in New Hampshire. Participating countries tied their currencies to the U.S. dollar, which the United States valued at a fixed gold price. The system aimed to promote exchange-rate stability and international economic cooperation; it broke down between 1971 and 1973 after the United States suspended dollar–gold convertibility and countries moved toward floating exchange rates.
Origins and aims
From 1 to 22 July 1944, delegates from 44 countries met at Bretton Woods, New Hampshire, at the United Nations Monetary and Financial Conference. Drawing on the disruption of the interwar years and the Great Depression, they sought a more cooperative monetary order that could support exchange-rate stability, postwar reconstruction and economic growth. The conference produced agreements establishing the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), the institution that became the core of the World Bank.
How the system worked
Under the system, participating countries maintained exchange rates for their currencies in relation to the U.S. dollar. The dollar, in turn, was linked to gold at an official price of US$35 per ounce, and foreign monetary authorities could convert dollars into gold at that price. Exchange rates were fixed but could be adjusted under agreed procedures; the arrangement was intended to limit destabilizing currency swings without restoring the rigidity of the prewar gold standard. The IMF was established to support international monetary cooperation, while the IBRD was created to finance reconstruction and development.
Breakdown and end
By the late 1960s, the stock of dollars held abroad had grown beyond the U.S. gold reserves available to support conversion at the official price. On 15 August 1971, President Richard Nixon suspended the dollar’s convertibility into gold, beginning the breakdown of the system. The December 1971 Smithsonian Agreement attempted to preserve fixed exchange rates with revised parities, but financial pressure resumed. In March 1973, major currencies began floating against the dollar, marking the abandonment of the Bretton Woods fixed-rate arrangement.
Key facts
- Founding conference
- The United Nations Monetary and Financial Conference was held at Bretton Woods, New Hampshire, from 1 to 22 July 1944.
- Participants
- Delegates from 44 countries attended.
- Exchange-rate structure
- Currencies were pegged to the U.S. dollar; the dollar was linked to gold at US$35 per ounce.
- Institutions
- The conference produced the agreements establishing the IMF and the IBRD.
- End of the system
- The dollar’s gold convertibility was suspended in 1971, and the fixed-rate arrangement was abandoned in 1973.
Timeline
1–22 July 1944
Delegates from 44 countries met at Bretton Woods and agreed on the foundations of the postwar monetary system and the charters of the IMF and IBRD.
15 August 1971
President Richard Nixon suspended the dollar’s convertibility into gold.
December 1971
The Smithsonian Agreement set a revised system of fixed exchange rates in an attempt to preserve the arrangement.
March 1973
Major currencies moved to floating exchange rates against the dollar, signaling the end of the Bretton Woods system.
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References
- 1.Creation of the Bretton Woods System
Federal Reserve History · other · reliability: high · retrieved 21 October 2026
Supports: The 1944 conference, its goals and the design of the international monetary system.
- 2.Bretton Woods and the Birth of the World Bank
World Bank Group · other · reliability: high · retrieved 21 October 2026
Supports: Conference dates and attendance, the Articles of Agreement, and the creation and purposes of the IMF and IBRD.
- 3.Nixon and the End of the Bretton Woods System, 1971–1973
Office of the Historian, U.S. Department of State · other · reliability: high · retrieved 21 October 2026
Supports: The dollar’s link to gold, the August 1971 suspension, the Smithsonian Agreement, and the 1973 move to floating exchange rates.
- 4.Money Matters, an IMF Exhibit -- The Importance of Global Cooperation, Conflict and Cooperation (1871-1944), Part 6 of 6
International Monetary Fund · other · reliability: high · retrieved 21 October 2026
Supports: The Bretton Woods meeting’s founding of the IMF and World Bank and the institutions’ complementary roles.
References are suggested by the research engine and may be incomplete. Unverified URLs are omitted rather than guessed.
Article history
- Version 121 October 2026 · EditorCreated by Zapia