Under the Bretton Woods System, central banks of countries other than the United States were given the task of maintaining fixed exchange rates between their currencies and the dollar. If a X currency was too high relative to $, its central bank would sell its currency in exchange for $, driving down the value of its currency. And, if the value of a X currency money was too low, the country would buy its own currency, of course driving up the price.

The BW system was the 1st example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states. Bretton Woods system was started in 1944, that was a new international monetary system.

The Bretton Woods system lasted until 1971. The Vietnam War accelerated inflation in the USA and a growing American trade deficit were undermining the value of the dollar. The shock of August 15 was followed by efforts under U.S. leadership to develop a new system of international monetary management. By 1973, the United States and other nations agreed to allow exchange rates to float.