In the pegged exchange rate system, the US served as central reserve country and did not have to adjust to its balance of payments deficit. From 1946 to 1949, the U.S. was running an average annual balance-of-payments surplus of $2 billion. In contrast, by 1947, European nations were suffering from chronic balance-of-payments deficits, resulting in the rapid depletion of their dollar and gold reserves. In contrast, upon the creation of Bretton Woods, with the U.S. producing half of the world’s manufactured goods and holding half its reserves, the twin burdens of international management and the Cold War were possible to meet at first. A clause was added in case a country ran a balance of payments surplus and its currency became scarce in world trade. Much of the discussions centered around the proposed bank’s dual purposes of reconstruction and development and its capital structure. It would be the unit for accounting between nations, so their trade deficits or surpluses could be measured by it. Discussions were largely dominated by the interests of the two great economic superpowers of the time, […]