THE INTERNATIONAL MONETARY FUND (2)

From 1945 until 1971 when the Bretton woods system broke down forever, the IMF nurtured the illusion that it could keep exchange rates stable most of the time.only under the extreme pressure of fundamental disequilibria persisting in a country is balance of payments would the IMF except that country to depreciate its exchange rate. Increasingly in the 1950s and 1960s,the imf found that pegging of exchange rates could not succeed in a world where costs and demands were changing differentially between regions , and where speculators could safely bet that the currencies which were overvalued would become unpegged .