How the US dollar became king of Reserve Currency? - Capital Street FX
INTRODUCTION
You may be wondering how the US dollar became the most powerful reserve currency. Here’s a look at some of the factors that have helped make it a global powerhouse.
INTRODUCTION TO BRETTON WOODS AGREEMENT
You may be wondering how the US dollar became the most powerful reserve currency.
Well, it all started with the Bretton Woods Agreement. This was an agreement that was made in 1944 between 44 Allied nations who wanted to rebuild the global economy after World War II. Under this agreement, the US dollar was converted into gold, which established a system of payments based on the dollar. This helped to stabilize global currencies and prevented economic collapse.
In addition, Bretton Woods also established a system of fixed currency exchange rates using gold as the universal standard. This meant that countries could exchange their currency for US dollars, which would then be exchanged for gold. This allowed international trade to flourish and prevented economic instability.
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