The correct answer is Option (1) → (B), (D), (A), (C)
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(B) First World War – Started in 1914
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(D) The Bretton Woods Conference – Held in 1944. This international conference led to the creation of key global institutions like the International Monetary Fund (IMF) and the World Bank. It also established the Bretton Woods system, where currencies were pegged to the US dollar, which was in turn pegged to gold. This system aimed to promote exchange rate stability and international economic cooperation after WWII.
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(A) The Smithsonian Agreement – The Smithsonian Agreement, signed in 1971, was an international monetary arrangement among major developed countries following the collapse of the Bretton Woods system. After the United States suspended the convertibility of the dollar into gold in August 1971, global exchange rate stability was disrupted. The agreement aimed to restore order by allowing greater flexibility in exchange rates, with currencies permitted to fluctuate within a 2.25 percent band around fixed par values. It also involved the devaluation of the US dollar to address trade imbalances. The Smithsonian Agreement marked a significant step towards the transition from a fixed exchange rate system to the modern floating exchange rate system.
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(C) Introduction of Liberalized Exchange Rate Management System (LERMS) – Introduced in 1992 in India. LERMS marked a shift from a fixed exchange rate system to a dual exchange rate regime, and eventually towards a market-determined exchange rate system. It was part of India’s broader economic liberalization process, undertaken after the 1991 balance of payments crisis.
Note: This question is from Pre rationalised NCERT.
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