<P> The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States , Canada , Western Europe , Australia , and Japan after the 1944 Bretton - Woods Agreement . The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent states . The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate ( ± 1 percent ) by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments . Also , there was a need to address the lack of cooperation among other countries and to prevent competitive devaluation of the currencies as well . </P>
according to the bretton woods agreement the task of imf would be to
bridge temporary imbalances of payments