August 15, 1971: Nixon
Takes US Dollar off Gold Standard
President Nixon officially
announces the end of the gold standard system of monetary policy for
international exchange of gold deposits in an evening address to the
country. Nixon’s move to sever the link between the dollar’s
value and gold reserves effectively ends the Bretton Woods system of
monetary exchange and changes the dollar to a “floating”
currency whose value is to be determined largely by market
influences. Nixon’s decision results from a run on gold exchanges
and rampant speculation in gold markets in Europe, and he changes
the US monetary policy after receiving advice from Treasury
Secretary John Connally, Under Secretary for Monetary Affairs Paul
A. Volcker, and others in a special working group. The dollar
becomes a fiat currency, causing a brief international panic before
other countries follow suit and also allow their currencies to “float.”
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Question: What
was the Bretton Woods system? Answer... |
