Presented by:

Sharara Mujib Prothoma

ID: 20-011
 Gold exchange standard (I)
 During the World War II, international trade was affected by high inflation and
devaluation of currencies:
 the need for a new monetary system that would be stable and favor
international trade.

 This was set up at the conference in Bretton Woods in 1944 and aimed to:
 bring about convertibility of all currencies;
 eliminate exchange controls;
 and establish an international monetary system with stable exchange rates.
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 The system was a mixed system consisting of a cross between a reserve
currency standard and a gold standard.
 US dollar remained the single currency convertible in gold:
 American authorities agreed to exchange gold for its own currency with
other CBs, upon demand, at the fixed price of $35/ounce.
 The Bretton Woods system ended in 1971, when USA ended trading of gold
at the fixed price of $35/ounce.
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 One key difference between this system and the gold standard was that the
reserve country did not agree to exchange gold for currency with the general
public, only with other CBs.
 If the non-reserve countries accumulated the reserve currency, they could
demand exchange for gold from the reserve country’s CB.
 Thus, gold reserve flowed away from the reserve currency country.