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Bretton Woods Pact Pros And Cons

516 Words3 Pages

After the Great Depression, the Bretton Woods pact was not the only innovation, in fact in the US in 1933 had been approved the new legislation for banking, the Glass-Steagall act: the division between the commercial and investment banks. In order to alleviate the problem born in 1929 after the Stock Market Crash there were two acts entering into force. The first one, in 1932, made the Federal Reserve more powerful in control of the money supply. The second wanted to make safer the banking system. In fact after this date banks cannot be commercial and investment banks at the same time, also the insurance services cannot be supply by banks. The Glass-Steagall act prohibited to banks to issue, sell or distributed every security they wanted. A new order for banking was a result of crisis and crisis was a result of excessive credit creation, and it had been followed, as Irving Fisher argued in 1933, by a debt deflation.

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