abhishreshthaa
New member
The Bretton Woods System had some contradictions which were pointed out by Prof. R Tryffin which were :-
The system depended on the dollar performing and its role as a key currency. Countries other than the U.S had to accumulate dollar balances as the dollar was the means of International payment.
This meant that the US had to run BOP deficits so that other countries could build up a stock of claims on the US.
When the US deficits started mounting, other countries started losing faith in the ability of the US to convert their dollar asset into gold.
The system depended on the dollar performing and its role as a key currency. Countries other than the U.S had to accumulate dollar balances as the dollar was the means of International payment.
This meant that the US had to run BOP deficits so that other countries could build up a stock of claims on the US.
When the US deficits started mounting, other countries started losing faith in the ability of the US to convert their dollar asset into gold.