Question

From the Unholy/Impossible Trinity menu, what did the governments meeting at Bretton Woods in 1944 choose and why?  What institutions were then constructed to support this choice (your answer should clearly link specific institutions to specific choices on the Unholy Trinity menu)?

Answer 1

The governments meeting at Bretton Woods in 1944 choose U.S Dollar as the global currency replacing gold standard.Earlier each country guaranteed that it would redeem its currency for its value in gold but the reason for choosing US Dollar as the global currency was that no other country's currency had enough gold to replace the US currency because the United States held three-fourths of the world's supply of gold .

World Bank and IMF were then constructed to support this choice.World Bank was established as a global central bank but at that time its work was to lend money to the European countries devastated by the World War II.This resulted in U.S. dominance in the world economy, it was the only nation that could print the global currency.Every country decided to contribute fixed amount of currencies and gold to be held by the IMF.The IMF was also given the responsibility for enforcing the Bretton Woods agreement.