<P> The Bretton Woods arrangements were largely adhered to and ratified by the participating governments . It was expected that national monetary reserves, supplemented with necessary IMF credits, would finance any temporary balance of payments disequilibria . But this did not prove sufficient to get Europe out of its conundrum . </P> <P> Postwar world capitalism suffered from a huge dollar shortage . The United States was running huge balance of trade surpluses, and the U.S. reserves were immense and growing . It was necessary to reverse this flow . Even though all nations wanted to buy US exports, dollars had to leave the United States and become available for international use in order for them to do so . In other words, the United States would have to reverse the imbalances in global wealth by running a balance of trade deficit, financed by an outflow of US reserves to other nations (a US financial account deficit). The US could run a financial deficit by either importing from, building plants in, or donating to foreign nations . Recall that speculative investment was discouraged by the Bretton Woods agreement . Importing from other nations was not appealing in the 1950s, because US technology was cutting edge at the time . So multinationals and global aid which originated from the US burgeoned . </P> <P> The modest credit facilities of the IMF were clearly insufficient to deal with Western Europe's huge balance of payments deficits . The problem was further aggravated by the reaffirmation by the IMF Board of Governors in the provision in the Bretton Woods Articles of Agreement that the IMF could make loans only for current account deficits and not for capital and reconstruction purposes . Only the United States contribution of $570 million was actually available for IBRD lending . In addition, because the only available market for IBRD bonds was the conservative Wall Street banking market, the IBRD was forced to adopt a conservative lending policy, granting loans only when repayment was assured . Given these problems, by 1947 the IMF and the IBRD themselves were admitting that they could not deal with the international monetary system's economic problems . </P> <P> The United States set up the European Recovery Program (Marshall Plan) to provide large - scale financial and economic aid for rebuilding Europe largely through grants rather than loans . Countries belonging to the Soviet bloc, e.g., Poland were invited to receive the grants, but finally they were forced by Stalin to reject the aid . In a speech at Harvard University on 5 June 1947, U.S. Secretary of State George Marshall stated: </P>

Under the bretton woods agreement currency exchanges would take place at