Part of the rehabilitation project was the creation of the European Payments Union in 1950. This made it possible to restore the convertibility of the current account in Europe by using the dollar as the unit of account for the calculation of balances. For the system to work, each country had to declare an exact parity in dollars and then follow guidelines to maintain that parity. This process began in 1948 and was a means of restoring commercial and financial stability in Europe. Of course, they were in chaos after the war. In the midst of all this, the fact that there could be a system like ROBOT in the UK, a pound floating system, strongly suggests that the Bretton Woods agreements were slightly less than safe. The support of money by the gold standard became a serious problem in the late 1960s. In 1971, the problem was so serious that US President Richard Nixon announced that the possibility of converting the dollar into gold would be “temporarily” suspended. This decision was inevitably the straw that broke the camel`s back for the system and the agreement it described.

The gist of the agreements was that the IMF would help members manage the balance of payments in a manner consistent with stable exchange rates and provide loans when needed. The main duty of the members was to allow free convertibility for account transactions, while capital account controls were allowed. Founded in 1945, the fund began operations in 1947. But it immediately became clear that there would be a longer transition period than expected – the British failed in their attempt (under strong pressure from the United States) to restore convertibility in 1947. As a result, countries have had a longer period of time to do so. The major industrialized countries obtained limited convertibility of their current accounts in 1958. The Bretton Woods system was introduced after World War II and existed from 1945 to 1972. In 1944, representatives of 44 nations met in Bretton Woods, New Hampshire, and designed a new post-war international monetary system. This system advocated the introduction of a stock market standard that included both gold and currencies.

Under this system, each country set a face value against the U.S. dollar, which was sent to gold at $35 per ounce. Under this system, the reserve currency country would aim to execute a balance of payments deficit (BOP) to supply reserves. If these deficits were to be very large, the reserve currency itself would experience a crisis. This condition has often been called the Triffin paradox. Eventually, in the early 1970s, the gold standard system collapsed for these reasons. From 1950 on, the United States faced trade deficit problems. With the development of the euro markets, there has been a huge outflow of dollars.

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