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Asked: 2025-11-10T04:24:52+00:00 In:

“The Bretton Woods system laid the foundation for post war economic stability and growth but its collapse marked the beginning of globalisation”. Analyse this statement with suitable reasons.

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The Bretton Woods system, formed in 1944, ensured economic stability by fixing exchange rates and creating IMF and World Bank. Its 1971 collapse ended fixed rates, encouraging free trade, foreign investment and flexible markets — marking the rise of globalisation.

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    1. The Bretton Woods system was created in 1944 to rebuild the post-war world economy.

      1. It established the IMF and World Bank to ensure financial stability and economic cooperation.
      2. Fixed exchange rates linked world currencies to the US dollar, ensuring predictable trade.
      3. It promoted international trade, industrial growth and employment in war-torn nations.
      4. However, the system collapsed in 1971 when the US stopped converting dollars into gold, leading to floating exchange rates.
      5. This collapse opened the path for free-market policies, deregulation and liberalisation.
        Hence, while Bretton Woods brought economic stability after World War II, its end marked the beginning of globalisation by encouraging open economies and the movement of goods, capital and technology worldwide.
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