Bretton Woods essay - What was the significance for...

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What was the significance for European integration of the fixed exchange rate mechanism of Bretton Woods and how did its end impact upon Europe? The Bretton Woods agreement was an international institutional and legal framework formed in New Hampshire, 1944. It asked for the sacrificial of sovereignty to restore post-war economic order and currency stability. Thus to achieve this objective it formed a fixed exchange rate system where the dollar was pegged to gold at the fixed parity of $35 /ounce. The fixed exchange rate mechanism of Bretton Woods involved individual European states forgoing their power to make monetary policies hence standardising economic objectives. This movement allowed the once fragmented Europe to reunite and place priority on reconstruction, creating a starting point towards economic integration. As the focus now lies on the interdependence of European economies, new responsibilities were placed upon national monetary authorities to draft economic and financial policies beneficial to the whole European Community. These agenda ended the beggar-thy-neighbour notion as it prevented the introduction of currency devaluation and trade policies drafted at the expense of everyone else. The gradual approach towards trade liberalisation rose from 66% in mid 1952 to 81% in mid 1954, most notably from France, Germany and Italy where they removed or relaxed trade impediments which stimulated capital, labour and investment mobility as well as increasing intra-European trade. In addition, the substantial growth in long-term capital investment was also directly
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Bretton Woods essay - What was the significance for...

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