International Economic History since 1870 - Essay Example
The http://buy-an-essays296255.mystrikingly.com/ plan of new economic financial system produced by the United Kingdom and the USA was aimed to remedy some imbalances of pre war economic financial system of gold standard. Such huge economic problems as the volatility of the floating exchange rates, dependence of the countries on the adjustment mechanisms, had been frequently resolved either by recession and deflation or by inflation and rapid expansion. New conference led to the establishment of the new fund International Monetary Fund that was destined to remedy some imbalances in the world economy.2
New mechanism devised by the countries provided for the system with fixed yet adjustable exchange rates; those countries that experienced payment deficits could borrow necessary funds from created monetary fund, whereas the nations with the payment surpluses could lend funds; the agreement also envisaged the change of the exchange rates if the financial steps taken by the Governments were not able to resolve the problem of the payment deficits.