Before 1914, anybody could go to the Bank of England and demand gold in exchange for banknotes

The gold standard was central to the classical economists’ view of the equilibrating processes

In international trade. The fact that each currency was freely convertible into gold fixed the

Exchange rates between currencies (specie points), and all international debts were settled in gold.

A balance of payments surplus caused an inflow of gold into the central bank’s reserves. This enabled

The central bank to expand the money supply without fear of having insufficient gold to meet

Its liabilities. The increase in the quantity of money raised prices, resulting in a fall in the demand

For exports and therefore a reduction in the balance-of-payments surplus. The reverse happened in

The event of a deficit. The UK came off the gold standard in 1914, partly returned to it in 1925, but

Ing to the BWS, the American dollar along with gold served a role of the world money. This mechanism

Of regulating exchange rates was imposed on the nations of Western Europe which were in a

Deep economic dependence on the US. The US had nearly 70 percent of all world stock of gold. As

я result of introducing the BWS, the dollar became the only exchange convertible into gold: $35 =

Troy ounce of gold.

To achieve its goals, the Bretton Woods Conference stated a number of conditions with which