At Bretton Woods, New Hampshire, a multinational conference with representatives from more than 40 nations met in July 1944 to focus on the creation of a bank that would help finance the rebuilding necessary after World War II, short-term financial problems, and ways to promote free trade. In the end, the Bretton Woods Agreement was created and established the International Monetary Fund (IMF) and the World Bank. According to the Bretton Woods Agreement, the nations created a new international monetary system based on the value of the U.S. dollar.

Originally, the new system was created to balance the flexibility that nations required in addressing short-term domestic monetary difficulties with the gold standard. Additionally, the Bretton Woods Agreement included fixed exchange rates by linking the value of ...

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