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The Bretton Woods System definitions

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  • Bretton Woods System
    A postwar arrangement where currencies were pegged to the US dollar, which was convertible to gold at a fixed rate.
  • Fixed Exchange Rate
    A regime where a currency's value is tied to another currency or commodity, preventing market forces from setting rates.
  • Gold Standard
    A monetary system where currency value is directly linked to a specific amount of gold.
  • US Dollar
    The central reserve currency under the postwar system, serving as the anchor for global exchange rates.
  • Gold Reserves
    Holdings of the precious metal by central banks, used to back the value of issued currency.
  • Dollar Reserves
    Foreign central banks' holdings of US currency, used to maintain exchange rate stability.
  • International Monetary Fund
    An institution created to provide financial assistance to countries facing reserve shortages.
  • Central Bank
    A national authority responsible for managing currency, reserves, and monetary policy.
  • Currency Revaluation
    An official increase in a currency's value relative to others, often resisted to protect export competitiveness.
  • Currency Undervaluation
    A situation where a currency's fixed rate is set below its market equilibrium, boosting exports but causing imbalances.
  • Surplus
    An excess supply of a currency at a fixed rate, often requiring intervention or adjustment.
  • Shortage
    A lack of sufficient currency supply at a fixed rate, leading to pressure for revaluation or external support.
  • Managed Float System
    A post-1973 regime where exchange rates are mostly market-determined, with occasional government intervention.
  • Inflation
    A general rise in prices, often resulting from excessive money creation or persistent currency imbalances.
  • Export Competitiveness
    The advantage gained by keeping a currency undervalued, making goods cheaper for foreign buyers.