Bretton Woods is a historic international financial system created in 1944. It was developed at the United Nations Monetary and Financial Conference held in Bretton Woods, New Hampshire and signed by representatives of 44 countries. The purpose of the agreement was to create an economic order that would promote global economic stability after World War II ended.
Under this new system, participating nations agreed to stabilize exchange rates between their currencies based on gold or the US dollar with all other national currencies pegged to one another against these two benchmark assets for pricing foreign goods and services – thus allowing for cross-border trade without significant fluctuation risks due to currency values changing abruptly. The International Monetary Fund (IMF) was also established as part of this agreement in order to provide short-term balance of payments assistance when necessary while promoting free trade among member states through lowered tariffs and subsidies on imports/exports between them.
The Bretton Woods Agreement lasted until 1971 when President Nixon suspended convertibility from USD into gold, leading many other countries around the world do likewise with their domestic fiat money supply; effectively ending what had been dubbed ‘the golden era’ for monetary policy worldwide during its lifespan up until then (1944-1971). This has since led economists and governments alike into more complex arrangements such as floating exchange rate systems which rely heavily upon market forces rather than fixed peg ratios backed by precious metals like those seen under Bretton Wood’s initial setup approach back in 1944 post WW2 period time frame..
