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h change in the par value of a major currency tended to become a crisis for the whole system.” This led to a lack of trust and destabilizing speculations.

Collapse of Bretton Woods System was dissolved between 1968 and 1973. U.S. President Richard Nixon announced to suspend the dollar's convertibility into gold temporarily in August of 1971. The dollar had struggled throughout 1960s within the parity established at Bretton Woods which showed the symptom of the end of the system. There was an attempt to reestablish the fixed exchange rates but it was failed. The major currencies began to float against each other in the March of 1973. At the same time, the par value system was abandoned and the member countries agreed on permitting different kinds of ways for determining the exchange value of a nation’s money. Started from the breakdown of the Bretton Woods System, IMF members have the freedom to select any form of exchange arrangement as they wish except pegging their currency to gold.

Most of the nations afraid of the breakdown of the Bretton Woods System would cause the end of the rapid growth period. But the transformation of the monetary standard to floating exchange rates made it easier for economies to adjust to more expensive oil especially during October of 1973 -- the price suddenly started rising. The IMF adapted its lending instruments in order to respond to the challenges created by the oil price shocks of the 1970s. It also set up the first of two oil facilities in order to aid oil importers to overcome the anticipated current account deficits and inflation in the face of higher oil prices.

IMF sought to respond to the balance of payments deficits faced by many poorest countries by providing concessional financing called the Trust Fund since the mid of 1970s. IMF created a new concessional loan program called the Structural Adjustment Facility in March of 1986. In December of 1987, the Structural Adjustment Facility was taken over by the Enhanced Structural Adjustment Facility.

As a conclusion, even though the Bretton Woods System of 1944 with its fixed exchange rates had been collapsed, its goals are still as valid today as they have been in the past. Most of the large developed nations allow their currencies to float freely nowadays and only supply and demand are the determinants of its worth. The value of the currencies can be influenced by buying and selling their own currency besides to peg the value of the money to one of the main currencies.

What are the implications of the Bretton Woods experience for future international monetary relations? The most important implication is that simply stabilizing exchange rates is not sufficient to automatically deliver the benefits trumpeted by the proponents of such an initiative. It is crucial that national economic policies, for instant, budget deficits, and economic outcomes, for instant, inflation, converge to a certain extent before countries decide to fix exchange rates. However, a short term divergence of policies is not detrimental for the functioning of such a system; it is rather a credible commitment to fixed exchange rates that ensures its stability. It can be concluded that ambitious international monetary reforms like the Bretton Woods System can only work if they are integrated into wider economic and political convergence. With this fact in mind it is easy to understand how far the world wi