The International Monetary System
This section gives a detailed perspective into the evolution of monetary standards and how the value of money is determined. You will learn how the value of money was determined by gold and how the value of money became independent of gold. The Bretton Woods agreement led to the establishment of the IMF and the World Bank. What effects did the Bretton Woods agreement have on currencies?
Post–World War II
Creation of the International Monetary Fund and the World Bank
Section 6.2 "What Is the Role of the IMF and the World Bank?" looks at the International Monetary Fund and the World Bank more closely, as they have survived the collapse of the Bretton Woods Agreement. In essence, the IMF's initial primary purpose
was to help manage the fixed rate exchange system; it eventually evolved to help governments correct temporary trade imbalances (typically deficits) with loans. The World Bank's purpose was to help with post–World War II European reconstruction. Both
institutions continue to serve these roles but have evolved into broader institutions that serve essential global purposes, even though the system that created them is long gone. Section 6.2 "What Is the Role of the IMF and the World Bank?" explores
them in greater detail and addresses the history, purpose, evolution, and current opportunities and challenges of both institutions.