| The current banking system could trace its roots | | | | Bank was created to fund the developing economies |
| back to the Bretton Woods agreement after the | | | | with a pool of funds contributed by major economies. |
| war in 1945. With the dust of war settling, an | | | | In order to develop an open market, the currencies |
| unprecedented raw market of possibilities were | | | | would need to be interchangeable with one another. |
| opened for inventions of the West to rebuild society. | | | | Back then, the gold was the standard used by |
| Unfortunately, these markets are restricted from | | | | countries in international trade and currencies were |
| capital inflows by currency system and trade rules of | | | | required to be pegged to the gold to ensure |
| individual nations. In order to foster greater economic | | | | interchangeability. |
| prosperity (for the elitist), a free trade system must | | | | However, the lack of gold reserves (most of it was |
| be developed with the creation of an international | | | | in Soviet Union) would restrict liquidity and hence the |
| body that facilitates the settlement of payments | | | | dollar was introduced as the next best option with its |
| between countries and provide lending to developing | | | | peg to gold at $35/ounce, the rising US economy and |
| nations. It was with this notion, that the IMF and | | | | increased liquidity. This would mean that countries |
| World Bank was formed. | | | | would peg their currencies against the dollar instead. |
| The IMF was tasked to maintain stability in the | | | | That was the birth of the dollar as the de facto |
| international monetary system and enable countries | | | | reserve currency of many countries. |
| to settle their payments to one another. The World | | | | |