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minbi, Japan has the yen, and so forth. The value a nation sets for its currency greatly impacts trade profits and can favor one nation at the expense of another. When a nation’s currency value is high, it can make extreme profits when trading with less-developed countries that have lower cur- rency values, inflating the price of goods imported into those countries. This can force countries with lower cur- rency values into debt, especially when trading in required goods such as medicines. The representatives at the Bretton Woods Conference decided the member nations should agree on a set monetary exchange rate. They believed this would stabilize profits made from trade and increase the ability of member nations to trade fairly for the goods their citizens needed or desired. The US dollar was established as the international curren- cy because, at the time, it was linked directly to the price of gold. This was something “real,” not arbitrary. The gold price, or gold standard, was fixed at $35 per ounce (28 g). The exchange rate for each nation’s currency was based on the amount of gold held in reserve by each country. This

standard made the US dollar the dominant currency of international trade. The gold standard remained in effect until the 1970s. The IMF, a specialized agency of the United Nations, was the third insti- tution established at the con-

Did You Know?

The International Bank for Reconstruction and Development (IBRD), now a part of the World Bank, has provided more than $500 billion in loans since 1946.

A Brief History of Global Trade 13

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