730 delegates from the 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, USA, for the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference. Delegates deliberated from July 1 to 22, 1944 and signed the Bretton Woods Agreement on the last day. Through the establishment of a system of rules, institutions and procedures for regulating the international monetary system, these agreements created the IMF and the International Bank for Reconstruction and Development (IBRD), now part of the World Bank Group. The United States, which controlled two-thirds of the world`s gold, insisted that the Bretton Woods system was based on both gold and the U.S. dollar. Soviet representatives attended the conference, but then refused to ratify the final agreements and claimed that the institutions they had created were « branches of Wall Street. »  These organizations were commissioned in 1945 after the agreement was ratified by a sufficient number of countries. In 1944, in Bretton Woods, following the collective conventional wisdom of the time, representatives of all leading allied nations collectively supported a regulated fixed exchange rate system, indirectly disciplined by a gold-related dollar – a system based on a regulated market economy, with strict controls on money values. International speculative financing flows have been held back by the passage and limitation by central banks. This meant that international investment flows were invested in foreign direct investment (FDI) – that is, the construction of factories abroad instead of international currency manipulations or bond markets. Although national experts have, to some extent, disagreed on the specific implementation of this system, everyone agreed on the need for strict controls. THE financial crises of US President Richard Nixon led to the end of the Bretton Woods system.
During these years, the foreign dollar exceeded the value of U.S. gold reserves at Fort Knox and elsewhere. This undermined the premise of the agreement, namely that the United States could still support its dollars with its gold equivalent. The Bretton Woods system is a series of uniform rules and guidelines that have provided the framework for the creation of fixed international exchange rates. Essentially, the agreement called on the new IMF to set the fixed exchange rate for currencies around the world. Each country represented assumed responsibility for maintaining the exchange rate, with incredibly narrow margins above and below. Countries struggling to stay within the fixed exchange rate window could ask the IMF for an adjustment in interest rates for which all allied countries would then be responsible. Despite its name, the World Bank has not been (and is) not the central bank of the world. At the time of the Bretton Woods agreement, the World Bank was created to lend to European countries devastated by the Second World War. The World Bank`s focus has changed in lending to economic development projects in emerging countries.
Below is a brief summary of why global economies were part of the Bretton Woods system, how the system worked, why it failed, and what the consequences of the agreement were on the development of the international monetary system. Modern economists can draw a perspective and insight from the discovery of their profession`s past. The Bretton Woods countries have decided not to give the IMF the power of a global central bank.