Bretton Woods Conference

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Commonly noted as the conference that birthed the IMF, the Bretton Woods Conference was primarily convened to prevent the mistakes of the Great Depression and arrange for war finances. The meeting took place in 1944 during World War II to prepare for the eventual defeat of both Germany and Japan.

Among the issues addressed in this conference, there was a clash in ideologies between White and Keynes—economists of the time. A new currency exchange system was created known as the Bretton Woods System which would serve to replace the previously established Gold Standard. This economic system would keep currencies in check because each country would peg their own currencies to the currency of the United States, and the United States would peg its currency to gold—promising an exchange rate from dollars to gold. This would prove to stabilize the exchange rates.

Another institution established by the Bretton Woods Conference was the IMF, which would play the role as the emergency "creditor" in times of financial crisis. Each member of the IMF would pay a quota, and the organization would lend to countries in need (an emergency loan). However, this system imposed conditions on borrowers because in exchange for the loans, the receiving country would have to change their economic policies. Through this, the IMF essentially played the role of "referee" in which they would judge whether pegs needed to be changed by monitoring the convertibility of currencies. 

While the conference was productive in creating these systems, they eventually collapsed. In the late 1960s, US policies led to inflation and an overvalued dollar and shrinking trade surplus. Administration could either deflate the currency (politically unpopular) or devalue the currency (requiring others to revalue). Nixon, the president at the time, chose to devalue the currency. This would cause the entire Bretton Woods System to shift, so instead of pegging currencies to US currencies, countries moved to floating exchange rates. 

Along with the change of the Bretton Woods System, the IMF also had to change along with it. Nowadays, the IMF's roles are somewhat similar, entailing loans, surveillance (bilateral and global), and technical assistance (advising countries on how to improve economic outcomes).

Works Cited

https://www.forbes.com/sites/johntamny/2013/03/31/keynes-white-and-the-battle-of-bretton-woods/#654cee5f5e58

http://lexicon.ft.com/Term?term=Bretton-Woods

https://www.britannica.com/event/Bretton-Woods-Conference

https://www.investopedia.com/terms/i/imf.asp

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