Reference no: EM133098733

Question - At the end of the Second World War the Bretton Woods Conference agreed to establish the U.S. dollar as the global vehicle currency and establish the value of the dollar to gold at $35 equal to one ounce of gold. Other currencies were pegged to the U.S. dollar within +/- 1% fluctuation. This was a fixed exchange rate. In 1947 the General Agreement on Tariff and Trade was established and reduced international trade tariffs. What was the reason for the fixed exchange rates and lower tariffs? What I am looking for is the reason to have a fixed global currency exchange and lower tariffs. Think of the global mindset in the mid 1940s after both World War One and World War Two and the desire to avoid World War Three. But, things changed in the 1970s. What changed and how have the international financial markets adapted? Hint: Currency exchange derivatives.