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Bretton Woods. At the Bretton Woods Conference in 1944, two proposals were made to manage international...

Bretton Woods. At the Bretton Woods Conference in 1944, two proposals were made to manage international payment imbalances. What were these two plans? How were they supposed to work? What was the primary difference between them? Which plan ultimately prevailed (and why)?

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Expert Solution

The Bretton Wood Conference is known as the United Nations Monetary and Financial Conference. The bretton wood system of monetary management established the rules for commercial and financial relations among the United States. The bretton wood system was the first example of afully negotiated monetary relations among independent states. The two praposals were made to manage the international payments imbalances are :

1) Keynes international Clearing Union.

2) The United States Plan

Keynes International Clearing Union Plan ultimately prevailed in the economy. A currently constituted and has a number of weaknesses. Large, persistant international imbalances nessitate defecit nations to deflate their economies or squeeze social wages in order to restore competetiveness.Keynes whereby symetrical treatment of balance of payment transaction may pramote economic growth and higher level of employment.


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