During the World War II most states of the universe eventually eliminated the remains of gilded criterion, it was non possible to interchange national fund as free anymore. Rigorous restrictions of foreign currency were entered for national colony of histories and capital flow. The buying power and par of pecuniary criterion broke off from each other because of the consequence of rising prices. Merely in the United States the restrictions of foreign currency did non alter well and most of the universe ‘s gold drifted to the United States. Economists realized to set up such a foreign exchange system, which compensates partially the scarceness of gold and provides extra installations for the operating of the increasing international trade. To be noticed, that the international currencies ( first of all the US dollar ) became more of import than the gold as a universe money.

In 1930s the exchange rate is one of the most of import contraptions in the concurrency of planetary trade. That ‘s why they took the stableness of exchange rates one of the cardinal function in the new system, and the liabilities of the authoritiess, which they assign the points of cash-flow at least between the comparatively fix exchange rates free alterations. They came to an understanding once more that the pecuniary function of gold tends to be stay in the new system. The Bretton Woods System was established in the conference of Bretton Woods, New Hampshire, United States since 65 old ages in World War II where 730 delegates from 44 allied states negotiated and agreed it, which means universe economic system. The chief point of this system was that the strongest industrial provinces of the universe were controlled the commercial and fiscal dealingss. The pecuniary system of Bretton Woods physiques at least three chief rules. First is the citation that all dollars would be converted into gold at $ 35 per ounce. Therefore the dollar was the common unit of all exchange rates. Second, stableness of exchange rate involves fixed exchange rates and the exchange rates of market, which could allow to travel its exchange rate in i‚± 1 % of par, but if it exceeds this par so esteem to step in. If the exchange rate is more than 10 % the permission of IMF was required and if less than 10 % it is under the power of state. The last 1 is the convertibility, which liberalize current balance of payment, but can be maintained the limitations of motions of capital.

It can be told, that the first pecuniary system, where the national recognition money is based on international use, which means the Bretton Woods. Within the Bretton Woods established the International Monetary Founds ( IMF ) in 1946 to modulate the international pecuniary system, which most authoritiess agreed to repair exchange rates. This administration was determined by the designation of Keynesian theoretical account, that the markets do non work absolutely. IMF was established to counterbalance the scarceness of liquidness from the imperfect working of markets. At present the ranks of IMF expanded to 186 states and researches say that “ working to further planetary pecuniary cooperation, unafraid fiscal stableness, facilitate international trade, promote high employment and sustainable economic growing, and cut down poorness around the universe ” .

The purposes of IMF ‘s establishment are:

The insurance of international trade balance to its turning

Contribution of rate stableness

Participate in constitution of many-sided system between members of states

Lend the abolition of exchange limitations, which it blocks the rise of universe trade

Insurance of fiscal resources for the members of states and adjust to rectify the payment of scale place for commercial and pay limitations without return

Cooperation with the international pecuniary jobs and guarantee the chances of audience forum

Consequently, the IMF non merely deals with the jobs of single states but the whole working of international pecuniary system excessively. His work dressed ores for those members of political relations and scheme position across which members of IMF can collaborate because of their stalls of financial system and economic growing.

The relationship between contractors requires international commercial exchange. Undertaking of the pecuniary governments is that they take attention of freshly emerging balance of payment of the protection of shortages in interstate relation and the defense mechanism of exchange rate. If the same marketer accepts an exchange rate but it is unwanted for him so the pecuniary governments must be buy back it against of cardinal currency ( gold or $ ) . In kernel, cardinal currency and commercial currency differentiated from each other in this system. The $ able to inculcate the entire map of the universe money: commercial and reserve currency in the same manner.

However, the other members of planetary economic system do non be assessed in set up to accept $ such a agency of payment so they can try to acquire rid of dollar. In this Bretton Woods system people can alter with goods, which means demand of gold.

A few old ages subsequently the Bretton Woods system collapsed in more causes. The economic enlargement of capitalist states brought an terminal of USA ‘s high quality. Western Europe and Japan have developed progressively and they began to get down the places of $ . After that, stood apart the contradiction between internationalisation of planetary economic system and controlling national features of monopolistic province. The chief job is that authoritiess expended the contraptions of national recognition and budgetary act for their economy of internal economic jobs that do non depend on pecuniary system. So the purposes of national ordinance got into problem with the demands of stableness of domain of currency.

The Bretton Woods system had proficient inadequacies excessively. They did non construct any mechanism into the system, which would stop the chronic difference of national rising prices rate. The system was unable to harmonize the official exchange pecuniary para from the variable par of buying power, which tended to devaluation and reappraisal. There were no optimum international liquidness mechanisms ; hence the system was unable to set up the balance of payments.

From 1967 broke out cyclical crisis and the large national currencies was traveling to be depreciate.A In 1973 the system became distorted and belly-up. These six old ages of cyclical crisis caused non-reversible alterations for the gold – $ criterion of characteristic characteristic.

Afterwards, the members of IMF have been able to take any other signifiers of exchange agreements what they wish except the currency of gold. The purpose is to keep the stable system for purchasing and selling the variable currencies that the payments of foreign exchange operate easy without hold between states. From the mid of 1970s, The IMF lends money for members that it presents some trouble to detect the fiscal committednesss for other members to execute economic and governmental reforms. The organisation established a Trust Fund to assist adoption for the universe ‘s hapless states. Get downing in 1986 the refunds of loans financed the Structural Adjustment Facility ( SAF ) .