What was a defining feature of the Bretton Woods system?

The Bretton Woods system, established in 1944, was characterized by fixed exchange rates where countries pegged their currencies to the US dollar, which was in turn convertible to gold. This system aimed to provide economic stability and foster international trade by minimizing exchange rate volatility. The commitment to convertibility to gold at a fixed rate helped to maintain confidence in international currencies and prevent competitive devaluations.

In this context, the correct answer emphasizes the pegging of currencies to gold, which was a cornerstone of the system and aligned with its goals. The other options do not accurately represent the structure of Bretton Woods; for instance, free-floating currencies and market-determined exchange rates were not a feature of this system, which sought stability through fixed rates. Additionally, the mention of currencies being fixed to the euro is anachronistic, as the euro was not introduced until decades after the Bretton Woods system had effectively ended. Thus, the defining feature of pegging currencies to gold is central to understanding the operation and objectives of the Bretton Woods framework.