I Answer the questions10 5100 1 What was the main reason tha

I Answer the questions.(10 5-100) 1. What was the main reason that Bretton Woods System break down only after 30 years later ? Erplain

Solution

Under Bretton Woods, the member countries fixed their exchange rate to the U.S. dollar and the U.S. dollar was linked to gold. This system collapsed in 1971 when the dollar was delinked from gold. The main reason for the collapse was the trade deficit of the U.S. There was a glut of U.S. Dollars and the convertability of dollars into gold was becoming difficult. The assets held by foreign central banks exceeded the total supply of gold in the U.S.