The Bretton Woods Agreement was created in 1944 at a conference of all allied nations of World War II. It took place in Bretton Woods, New Hampshire. 730 delegates from the 44 Allied countries prepared for the rebuilding of the international economic system during World War II and gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, USA, for the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference. Delegates deliberated from 1 to 22 July 1944 and signed the Bretton Woods Agreement on the last day. By establishing a system of rules, institutions, and procedures to regulate the international monetary system, these agreements created the IMF and the International Bank for Reconstruction and Development (IBRD), now part of the World Bank Group. The United States, which controlled two-thirds of the world`s gold, insisted that the Bretton Woods system be based on both gold and the U.S. dollar. Soviet representatives attended the conference, but later refused to ratify the final agreements, claiming that the institutions they created were “branches of Wall Street.”  These organizations began their work in 1945 after a sufficient number of countries had ratified the Convention. The agreement could not promote discipline from the Federal Reserve or the U.S. government.
The Federal Reserve was concerned about an increase in the domestic unemployment rate due to the depreciation of the dollar. To undermine the smithsonian agreement`s efforts, the Federal Reserve lowered interest rates to meet a predetermined national goal of full national employment. With the Smithsonian agreement, member countries expected dollars to return to the United States, but the reduced interest rates in the United States meant that dollars continued to flow from the United States to foreign central banks. The influx of dollars into foreign banks continued the process of monetizing the dollar abroad and thwarted the goals of the Smithsonian agreement. As a result, the price of the dollar on the gold-free market continued to exert pressure on its official rate; Shortly after the announcement of a 10% devaluation in February 1973, Japan and the EEC countries decided to let their currencies fluctuate. This turned out to be the beginning of the collapse of the Bretton Woods system. The end of Bretton Woods was officially ratified in 1976 by the Jamaica Agreement. In the early 1980s, all industrialized countries used fluctuating currencies.   The Bretton Woods system was introduced as a more stable replacement for the gold standard, where all currencies were convertible into gold. Under the new agreement, the dollar was the norm for international transactions, with its value set at 1/35 per ounce of gold. The fact that the United States held a large part of the world`s gold reserves and allowed the dollar to assume its new role as the default currency on which exchanges were based.
4. If the holdings of the fund in the currency of an outgoing Member exceed the amount due to it and no settlement agreement is reached within six months of the date of disbursement, the former Member shall be required to redeem such excess currency in a freely usable currency. The repayment will be made at the rates at which the Fund would sell these currencies at the time of withdrawal from the Fund. The outgoing member must make the repayment within five years of the date of withdrawal or within a longer period that may be determined by the Fund, but is not required to repay more than one-tenth of the excess assets of the Fund in its currency at the time of withdrawal during a semi-annual period plus other acquisitions of the currency during that half-yearly period. If the outgoing member does not comply with this obligation, the Fund may, in an orderly manner, liquidate the amount of the currency that should have been redeemed on any market. Supporting money with the gold standard began to become a serious problem in the late 1960s. In 1971, the problem was so serious that US President Richard Nixon announced that the ability to convert the dollar into gold would be “temporarily” suspended. This decision was inevitably the straw that broke the camel`s back for the system and the agreement it described.
Post-war world capitalism suffered from a huge shortage of dollars. .