Member nations were required to comply. Each nation agreed to establish a par value for its currency;

That is, the value of a unit of its currency would be fixed in relation to the dollar or to gold. This

Would prevent great fluctuations of national currencies in relation to each other.

Member nations also agreed upon the principle of currency convertibility. Thus, if one nation

Owned the currency of another, it would be able to sell it back at par value. A.third agreement was

That member governments would contribute to the operating funds of the IMF according to the

Volume of their international trade, national income, and their international reserve holdings. Part

of the contribution is in gold, the remainder in the nation’s own currency.

Under the Bretton Woods System, exchange rates were pegged to one another and were stable,

Participating nations were obligated to maintain these rates by using stabilization funds, gold, or

borrowings from the IMF. Persistent or “fundamental” payments deficits could be met by IMF —

S anctioned currency devaluations.

However, slowdown of growth rates of economic development and currency crisis at the end of

The 60s caused inflationary processes to rise.

The effects of the large trade deficit of the US were manifold. The deficit had a contractionary

Effect upon the US domestic economy. American export-dependent industries experienced defines