Agreements

• Bretton Woods Agreement background: during the late 1800s through 1920s, global trade grew. The Great Depression and World War II coincided with a collapse of international trading system and national relationships. After World War II, several countries came together to energize international commerce. In 1944, governments of 44 countries negotiated and signed the Bretton Woods Agreement
• Bretton Woods Agreement: pegged value of US dollar to an established value of gold at a rate of $35 per ounce
• In the 1960s, emergent global economic conditions led to high trade deficits in US. As a result, the link between the US dollar and gold was suspended in 1971.
• The Bretton Woods Agreement aimed to stabilize exchange rates worldwide
• International Monetary Fund: attempts to stabilize currencies by monitoring foreign exchange systems of member countries and lending to developing economies
• World Bank: provides loans and technical assistance to low and middle income countries with the goal of reducing poverty
• following the 1997 Asian financial crisis, finance ministers and central bank heads from 20 advanced and emerging market economies established the Group of Twenty
• the Group of Twenty aims to bring greater stability to global financial system
• the Group of Twenty comprises 19 countries and 2 regional bodies
• the Group of Twenty represents about 90% of the world economy
• the Group of Twenty cooperates closely with the International Monetary Fund and World Bank