The creation of Bretton Woods led countries to attach their currency to the U.S. dollar. In return, the dollar was pepped to the price of gold and the United States dominated the global economy. The United States was the only nation that could print the world-wide accepted currency, and countries had more flexibility than with the old gold standard. The Bretton Woods Agreement of 1944 introduced a new global monetary system. It replaced the gold standard with the U.S. dollar as the global currency. It thus established America as a dominant power in the global economy. After the agreement was signed, America was the only country with the ability to print dollars. Britain pursued a deflationary policy in the 1920s, but surplus countries (United States-France) did not participate in the adjustment process. In order to promote long-term adjustment, the United States has encouraged the competitiveness of European and Japanese trade. The policy of economic control of the former defeated Axis powers has been abolished. Aid to Europe and Japan has been geared towards rebuilding productivity and export capacity.
In the long term, such a recovery in Europe and Japan was expected to benefit the United States by expanding U.S. export markets and providing sites for U.S. capital expansion. The Bretton Woods monetary management system established the rules governing trade and financial relations between the United States, Canada, Western European countries, Australia and Japan under the Bretton Woods Agreement of 1944. The Bretton Woods system was the first example of a fully negotiated monetary settlement designed to govern monetary relations between independent states. The main features of the Bretton Woods system were each country`s commitment to a monetary policy that kept its exchange rates within 1% by linking its currency to gold and the ability of the International Monetary Fund (IMF) to overcome temporary imbalances in payments. In addition, it was necessary to address the lack of cooperation between other countries and to avoid a competitive devaluation of currencies. There is no provision in the agreement for the establishment of international reserves.