The Bretton Woods Accord

In summary...

The Bretton Woods Accord or United Nations Monetary and Financial Accord was signed in July 1944 but it was not until 1959 that all European currencies became convertible and the accord operative. The purpose of this agreement was the encouragement of open markets and the end of economic nationalism as well as joint management of the political - economic order of the West.

The main goals of this accord were:

- Adjustable backing of prices (pegging) system

- Convertible currencies

- Establishment of the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD) - currently part of the World Bank - and the International Trade Organization (ITO)

Forty-four nations participated in this agreement.

According to the Bretton Woods Accord, the major trading currencies were pegged to the U.S. dollar and they were allowed to fluctuate only one percent on either side of that rate.

Now, as a response to the financial crisis that reached alarming peaks in October 2008, EU leaders called for a revision and rewriting of the Bretton Woods Accord for sometime in November or December of 2008 in order to set up institutions to oversee the current world economy.

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