MARKET 1 Lecture Notes - Lecture 3: United States Dollar, Barry Eichengreen, Alternative 3
Document Summary
Barry eichengreen: global imbalances and the lessons of bretton woods. Background: what is the bretton woods system? (source) 1944: conference of all of the world war ii allied nations in bretton woods, new hampshire. Outcomes: establishing the u. s. dollar as the global currency, taking the world off of the gold standard, creation of the world bank and the international monetary fund. Monitoring the new system: us became the only country with the ability to print dollars and the dominant power behind these two organizations & the world economy. If a country"s currency value became too weak relative to the dollar, the bank would buy up its currency in foreign exchange markets: decrease currency supply, which would raise the price. If currency became too high, the bank would print more would increase the supply and lower its price: agreement to avoid any trade warfare, not lowering currencies strictly to increase trade.
