Under the Bretton Woods system,each country was responsible for maintaining its exchange rate within ±1 percent of the adopted par value by

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Under the Bretton Woods system, countries were required to maintain their exchange rate within a narrow band of ±1 percent of the adopted par value. To achieve this, countries had to intervene in the foreign exchange market by buying or selling their currency as necessary to maintain the exchange rate within the allowed range. Buying or selling gold was also an option, but less common. Expanding or contracting the supply of loanable funds, or increasing or decreasing the money supply as necessary, were not viable options for maintaining exchange rates under the Bretton Woods system.

Under the Bretton Woods System,each Country Was Responsible for Maintaining