Final answer:
The Bretton Woods Agreement was formed to address the issues of inadequate monetary reserves and unstable currencies before World War II, establishing the US dollar as the global monetary reserve and creating the IMF and the World Bank.
Step-by-step explanation:
To overcome the problems of inadequate monetary reserves and unstable currencies that plagued international trading before World War II, the Bretton Woods Agreement was formed. In 1944, at the Bretton Woods resort in New Hampshire, representatives from 44 countries established this system of monetary management to set the rules for commercial and financial relations among the world's major industrial states. As part of the agreement, the US dollar was fixed as the global monetary reserve, and it was agreed that other currencies would have a fixed parity with both gold and the US dollar.
The establishment of the International Monetary Fund (IMF) and the World Bank at Bretton Woods aimed to stabilize the international economy and fixed currency exchange rates. Further, it resolved issues of international liquidity partially through the Marshall Plan, which provided substantial aid for Europe and Japan's postwar recovery. Though the Bretton Woods Agreement itself did not last indefinitely, it established a precedent for international financial cooperation and the concept of fixed exchange rates, even after the gold standard was eventually abandoned.