The international monetary system represents the rules and procedures for exchanging national currencies. This system doesn't have a physical presence, like the Federal Reserve System, nor is it as codified as the Social Security system. The International Monetary system it consists of interconnecting rules and procedures and is subject to the foreign exchange market, and therefore to the judgments of currency traders about a currency. The classical Gold standard The first modern international monetary system was the gold standard. Operating during the late 19th and early 20th century, the gold standard provided for the free circulation between nations of gold coins of standard specification. Under the system, gold was the only standard of value. Because of its durable, storable, portable, easily recognized and easily standardized properties, gold had been used for exchange almost from the beginning. From 1821 to 1880 most countries joined the gold standard. The participating countries in the gold standard were supposed to fix the prices of their domestic currencies in terms of a specified amount of gold.   One of the advantages of the system is the stabilizing influence which means that a nation that exported more than it imported would receive gold in payment of the balance. By increasing the gold coming into the country would increase prices and lower the value of the domestic currency. Higher prices resulted in decreasing the demand for exports which will contribute to an outflow of gold to pay for the imports and ultimately bring the prices at the original level.  On the other hand, one of the defects with the gold standard was its inherent lack of liquidity, meaning that the world’s supply of money would be limited by the world’s supply of gold. In addition, any unusual increase in the supply of gold, such as the discovery of a rich lode, would cause prices to rise abruptly. For these reasons and others, the international gold standard broke down in 1914 and was replaced by the gold bullion standard in 1920s under which currencies backed their currencies with gold bullion and agreed to buy and sell the bullion at a fix price. This system was abandoned as well, in the 1930s. On one hand supporters of the gold standard believed that the gold period was characterized by a rapid expansion of virtually free international trade, stable exchange rates and prices, a free flow of labor and capital across borders, rapid economic growth and in general, world peace. In contrast, the opponents of a rigid gold standard mentioned more the destructive economic conditions during this period, such as: a major depression during 1890s, a severe economic contraction in 1907 and, repeated recessions. Bretton Woods Conference In order to avoid such destructive economic policies in the future, the Allied nations created a new monetary system at a conference held in Bretton Woods in 1944. The conference created two new institutions: The International monetary Fund (IMF) and the International Bank Reconstruction and Development (World Bank). The two institutions were created to promote international financial stability but the roles of the both agencies have evolved over the years.   Today, the IMF overseas exchange rate polices in 182 member countries and advises developing countries about how to improve their economies. Also, the IMF has become the “lender of last resort” to countries that have the misfortune to get into serious financial burden. The Role of the World Band is to expand its lending to developing countries and to provide more loan guarantees foe new businesses entering the market.   References: Alan C. Shapiro & Atulya Sarin, Foundations of multinational Financial Management, ed 2009; The International monetary System, Chapter 3, page 65.  http://www.infoplease.com/ce6/bus/A0825353.html