The Breton Woods agreement led to the global monetary system inuse today. Problems with Breton Woods, however, also led to itscollapse and highlight a basic tension over the roles money playsin any economy. Review why Breton Woods first enabled theinternational exchange of goods and later created increasingfinancial instability. What did President Nixon do in 1971 thattransformed the international monetary system? Explain how themodern global monetary system works. What does it mean whencurrencies “float” or are “pegged”? Give examples. Also provide anexample and explanation for a case where the international monetarysystem contributed to political instability/unrest within acountry.
