The Bretton Woods meeting

The meeting was called by Roosevelt and Churchill to ensure post-war prosperity through economic co-operation, avoiding the economic conflicts between countries in the 1930s that they believed contributed to the drift to war.

The principal negotiators were the US Treasury's H. D. White, and the UK's John Maynard Keynes. Chairing the proceedings was Henry Morgenthau, the US Treasury Secretary.

The meeting was part of the process led by the US to create a new international world order based on the rule of law, which also led to the creation of the United Nations and the strengthening of other international organisations.

The delegates focused on two key issues: how to establish a stable system of exchange rates, and how to pay for rebuilding the war-damaged economies of Europe.

They established two international organisations to deal with these problems. The International Monetary Fund was set up to enforce a set of fixed exchange rates that were linked to the dollar, and the World Bank which was set up to make long-term loans.

However, more ambitious proposals from the UK's John Maynard Keynes to set up a world central bank which could issue its own currency were rejected by the US.

Keynes hoped a new bank could help reflate the world economy by expanding the money supply. He also wanted the cost of adjustment shared between countries with trade surpluses and deficits, so that countries with big surpluses would have to revalue their currencies, as well as deficit countries being forced to devalue.

Instead, the Bretton Woods system gave the US currency - which was linked to gold - the dominant position in the world economy and allowed the US to run a trade deficit without having to devalue. And the US, which contributed the most money to both institutions, also gained the most voting rights, giving it a veto over major policy decisions.

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From the BBC Bretton Woods