Explanation:

Bretton Woods System :

• The Bretton Woods Conference held in 1944 set up the International Monetary Fund (IMF) and the World Bank (WB) and reestablished a system of fixed exchange rates.  This was different from the international gold standard in the choice of the asset in which national currencies would be convertible. A two-tier system of convertibility was established at the center of which was the dollar.
• The Bretton Woods System included 44 countries. These countries were brought together to help regulate and promote international trade across borders. As with the bene fi ts of all currency pegging regimes, currency pegs are expected to provide currency stabilization for trade of goods and services as well as financing. at the fi xed price of $35 per ounce of gold. The second-tier of the system was the commitment of the monetary authority of each IMF member participating in the system to convert their currency into dollars at a fi xed price. The latter was called the offi cial exchange rate.
• By the early 1960s, the U.S. dollar’s fixed value against gold, under the Bretton Woods system of fi xed exchange rates, was seen as overvalued. A sizable increase in domestic spending on President Lyndon Johnson’s Great Society programs and a rise in military spending caused by the Vietnam War gradually worsened the overvaluation of the dollar.
• The US monetary authorities guaranteed the convertibility of the dollar into gold