The Bretton Woods Agreement is a set of rules designed to govern how international currency exchange rates would be determined and managed. In July 1944, delegates from 44 nations met in Bretton Woods, New Hampshire, USA, to build a new monetary system as World War II was ending.
The core idea: all currencies would be pegged to the US dollar at fixed rates, and the dollar would be convertible to gold at $35 per ounce. This made the dollar the world's primary reserve currency.
The agreement also created two key institutions — the IMF (to oversee exchange rate stability) and the World Bank (to fund postwar reconstruction). The system worked well for nearly three decades.
By the late 1960s, excessive dollar printing (largely due to Vietnam War costs) made the gold peg unsustainable. In August 1971, President Nixon ended dollar-to-gold convertibility — the "Nixon Shock" — effectively killing the Bretton Woods system. Its legacy lives on through the IMF, the World Bank, and the dollar's continued dominance as the world's reserve currency.