The period from World War II to 1973 has been characterized as a period of stable but adjustable exchange rates, with full recognitions of the fact that many nations, especially Less Developed Country did not have stable exchange rates during that time.
World War I had a serious effect on the international monetary system because it reduced confidence in sterling deposits as an international reserve asset.
When the attempt to restore the gold standard during the 1920s ended in disaster in the Depression of 1929-1932 and the international financial crisis of 1931, the international monetary system began to disintegrate Exchange rates fluctuated, sometimes erratically Many countries explained that other countries purposely encouraged currecy depreciation to engage in a beggar-my-neighbor policy. International trade was at a low level, and international capital flows had virtually stopped.
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