United Nations Monetary and Financial Conference - Purposes and Goals

Purposes and Goals

The Bretton Woods Conference took place in July 1944, but did not become operative until late December 1958, when all the European currencies became convertible. Under this system, the IMF and the IBRD were established. The IMF was developed as a permanent international body. The summary of agreements states, "The nations should consult and agree on international monetary changes which affect each other. They should outlaw practices which are agreed to be harmful to world prosperity, and they should assist each other to overcome short-term exchange difficulties." The IBRD was created to speed up post-war reconstruction, to aid political stability, and to foster peace. This was to be fulfilled through the establishment of programs for reconstruction and development.

The main terms of this agreement were:

1. Formation of the IMF and the IBRD (at present part of the World Bank).
2. Adjustably pegged foreign exchange market rate system: The exchange rates were fixed, with the provision of changing them if necessary.
3. Currencies were required to be convertible for trade related and other current account transactions. The governments, however, had the power to regulate ostentatious capital flows.
4. As it was possible that exchange rates thus established might not be favourable to a country's balance of payments position, the governments had the power to revise them by up to 10%.
5. All member countries were required to subscribe to the IMF's capital.