Slide: Demand for Dollars

 Introduction:

 The Bretton Woods system was designed to create exchange rate stability.

 Increasing Demand for Dollars:

 During this system, U.S. dollars were highly sought after as a safe asset and the
primary global reserve currency.

 This surge in demand for dollars exceeded the growth of U.S. gold reserves.

 The demand for dollars became a major aspect of the liquidity problem.

Slide: Addressing the Liquidity Problem

 U.S. Initiatives:

 The United States recognized the liquidity problem and initiated several solutions.

 One prominent effort was the Marshall Plan, a massive aid program aimed at
rebuilding war-torn European economies.

 These initiatives injected liquidity into the global economy and helped stabilize
exchange rates.

 Role of the IMF:

 The International Monetary Fund (IMF) played a crucial role in addressing the
liquidity issue.

 The IMF provided member economies with resources to manage their balance of
payments, ensuring they had enough liquidity to stabilize their currencies.

 These interventions were essential in maintaining confidence in the Bretton Woods

system.