History of International Monetary and Financial Cooperation and its Importance in the Development of the International Financial Markets

Abstract

The history of international monetary and financial cooperation illustrates how the monetary system influenced the international financial market. The following pages will show how countries attempted to achieve internal and external equilibrium through their various international monetary mechanisms. The gold standard period (1870-1914) deserves special attention because subsequent attempts to reform the international monetary system based on fixed exchange rates were built upon the strength of the gold standard. The interwar years (1918-1939) were marked by rampant banknote printing, which led to high levels of inflation. The Bretton Woods Agreement (1945-1973), which established the International Monetary Fund, was the result of the profound concern of the governments of forty-four countries regarding the disastrous economic events of the interwar period.