393:
379:
As a reaction to the temporary closure of the London gold market in March 1968 and the resulting instability of the gold markets and the international financial system in general, Swiss banks acted immediately to minimize the effects on the Swiss banking system and its currency by establishing a gold
189:
In
November 1961, eight nations agreed on a system of regulating the price of gold and defending the $ 35/oz price through measures of targeted selling and buying of gold on the world markets. For this purpose each nation provided a contribution of the precious metal into the London Gold Pool, led by
161:
The
Bretton Woods system was challenged by several crises. As the economic post-war upswing proceeded, international trade and foreign exchange reserves rose, while the gold supply increased only marginally. In the recessions of the 1950s, the US had to convert vast amounts of gold, and the Bretton
408:
was the first to withdraw support for the dollar and officially abandon the
Bretton Woods accords, fueling a quick decline in the value of the dollar. Under pressure from currency speculation, Switzerland declared secession in August with $ 50 million in gold purchases, and France followed suit at
400:
The collapse of the gold pool forced an official policy of maintaining a two-tiered market system of stipulating an official exchange standard of US$ 35, while also allowing open market transactions for the metal. Although the gold pool members refused to trade gold with private persons, and the
366:
be closed the following day to combat the heavy demand for gold. The ad-hoc declaration of the same Friday (March 15) as a bank holiday in
England by the Queen upon petition of the House of Commons, and a conference scheduled for the weekend in Washington, were deemed to address the needs of the
340:
By 1965 the pool was increasingly unable to balance the outflow of gold reserves with buybacks. Excessive inflation of the US money supply, in part to fund the
Vietnam War, led to the US no longer being able to redeem foreign-held dollars into gold, as the world's gold reserves had not grown in
401:
United States pledged to suspend gold sales to governments that traded in the private markets, this created an open opportunity for some market participants to exploit the gold window by converting currency reserves into gold and selling the metal in the gold markets at higher rates.
375:
to repeal the requirement for a gold reserve to back the US currency as of Monday, March 18, 1968. The London gold market stayed closed for two weeks, while markets in other countries continued trading with increasing gold prices. These events brought the London Gold Pool to an end.
412:
The United States, under
President Richard Nixon, reacted strongly to end an inflationary spiral, and unilaterally, without consultation with international leaders, abolished the direct convertibility of the United States dollar into gold in a series of measures known as the
341:
relation, and the payment deficit had grown to US$ 3 billion. Thus, the London Gold Pool came under increased pressures of failure, causing France to announce in June 1967 a withdrawal from the agreements and moving large amounts of gold from New York to Paris.
61:
while buying gold on price weaknesses. The United States provided 50% of the required gold supply for sale. The price controls were successful for six years until the system became unworkable. The pegged price of gold was too low, and after runs on
169:
After oil import quotas and restrictions on trade outflows were insufficient, by 1960, targeted efforts began to maintain the
Bretton Woods system and to enforce the US$ 35 per ounce gold valuation. Late in 1960, amidst
158:, between free market gold price and the foreign exchange rate, the more tempting it was for nations to deal with internal economic crises by buying gold at the Bretton Woods price and selling it in the gold markets.
362:
measures in the US tried to avert a continued run on gold and attacks on the US dollar. On 14 March 1968, a
Thursday evening, the United States requested of the British government that the
102:
646:
69:
The London Gold Pool controls were followed with an effort to suppress the gold price with a two-tier system of official exchange and open market transactions, but this
464:
354:
Despite policy support and market efforts by the United States, the 1967 attack on the
British pound and a run on gold forced the British government to
945:
171:
892:
57:
The central banks coordinated concerted methods of gold sales to balance spikes in the market price of gold as determined by the London morning
699:
518:
106:
718:
396:
Gold bull market prices and their decline after the collapse of the London Gold Pool in 1968 (in nominal US$ and inflation adjusted US$ /oz)
939:
66:, the British pound, and the US dollar occurred, France decided to withdraw from the pool. The London Gold Pool collapsed in March 1968.
544:
434:
139:
of gold was pegged to US$ 35. This agreement did not affect the independent global or regional markets in which gold was traded as a
996:
991:
902:
607:
976:
951:
198:
The members of the London Gold Pool and their initial gold contributions in tonnes (and USD equivalents) to the gold pool were:
97:, United States, to reestablish and regulate the international financial systems. The meeting resulted in the founding of the
835:
150:. For the Bretton Woods system to remain effective, the fix of the dollar to gold would have to be adjustable, or the free
804:
372:
190:
the United States pledging to match all other contributions on a one-to-one basis, and thus contributing 50% of the pool.
570:
94:
77:, and resulted in the onset of the gold bull market which saw the price of gold appreciate rapidly to US$ 850 in 1980.
986:
98:
625:
174:
debates, panic buying of gold led to a surge in price to over US$ 40 per oz, resulting in agreements between the
42:
in the United States and seven
European countries that agreed on 1 November 1961 to cooperate in maintaining the
981:
404:
Amidst accelerating inflation in the United States, this unsustainable situation collapsed in May 1971, when
154:
would have to be maintained near the $ 35 official foreign exchange price. The larger the gap, known as the
120:
971:
769:
175:
90:
513:
The Gold Pool (1961–1968) and the Fall of the Bretton Woods System: Lessons for Central Bank Cooperation
444:
363:
51:
859:
163:
114:
43:
703:
918:
818:
381:
350:"the international financial system was moving toward a crisis more dangerous than any since 1931."
344:
The 1967 devaluation of the British currency, followed by another run on gold and an attack on the
722:
409:
the rate of $ 191 million. This brought the US gold reserves to their lowest level since 1938.
898:
640:
603:
548:
491:
348:, was one of the final triggers for the collapse of the pooling arrangements. By spring 1968,
131:, or a currency convertible into gold. The United States dollar was recognized as the world's
123:
rates were fixed, but adjustments were allowed when necessary. Currencies were required to be
512:
948:
by Michael Dooley, PhD, David Folkerts-Landau and Peter Garber, Deutsche Bank (October 2005)
595:
571:"The Bretton Woods Conference: Birth of a Monetary System (Section: Gold and the US Dollar)"
522:
132:
105:(IBRD), and was followed by other post-war reconstruction efforts, such as establishing the
183:
179:
793:. Helsinki, Finland: XIV International Economic History Congress, University of Helsinki.
873:
Speech by Darryl R. Francis, President Federal Reserve Bank of St. Louis (1968-07-12).
454:
439:
345:
140:
124:
109:(GATT). The IMF was charged with the maintenance of a system of international currency
787:
600:
Gold, Dollars, and Power - The Politics of International Monetary Relations, 1958-1971
965:
874:
449:
359:
128:
110:
35:
743:
182:
to stabilize the price by allocating for sale substantial gold supplies held by the
459:
405:
86:
39:
934:
421:
414:
355:
147:
74:
58:
888:
574:
151:
136:
47:
46:
of fixed-rate convertible currencies and defending a gold price of US$ 35 per
685:
384:, which helped in establishing Zürich as a major trading location for gold.
143:
186:. The United States sought means of ending the drain on its gold reserves.
17:
844:
392:
127:. For this purpose, all currencies had to be backed by either physical
942:
University of Iowa Center for International Finance and Development
495:
664:
63:
484:
The two-tiered market system from 1968 to 1971 is described by
770:"Memorandum of discussion, Federal Open Market Committee"
135:, as the anchor currency of the system. The price of one
424:
culminating in a price peak of US$ 850 in January 1980.
897:. New York, New York: Basic Books. pp. 295–298.
103:
International Bank for Reconstruction and Development
786:
Richard Roberts, University of Sussex (2006-08-21).
515:. The Journal of Economic History, 79(4), 1027–1059.
369:
reach a decision with regards to future gold policy
162:Woods system suffered increasing breakdowns due to
919:"London Gold Fixings - 1980 Monthly Gold Averages"
602:, The University of North Carolina Press (2003),
358:the pound on 18 November 1967, by 14.3%. Further
645:: CS1 maint: bot: original URL status unknown (
573:. Leland Stanford Jr. University. Archived from
465:United Nations Monetary and Financial Conference
875:"The Balance of Payments, The Dollar, and Gold"
420:The events of 1971 ignited the onset of a gold
511:Bordo, M., Monnet, E., & Naef, A. (2019).
367:international monetary situation in order to
8:
686:"R.I.P - The London Gold Pool, 1961 - 1968"
619:
617:
615:
952:HL Deb 21 November 1967 vol 286 cc904-1036
764:
762:
760:
628:. Archived from the original on 2009-11-19
547:. U.S. Department of State. Archived from
519:The Gold Battles Within the Cold War (PDF)
658:
656:
935:Federal Reserve System - Monetary Policy
391:
200:
946:International Financial Stability (PDF)
830:
828:
805:"Wilson defends 'pound in your pocket'"
788:"Sterling and the End of Bretton Woods"
536:
477:
85:In July 1944, before the conclusion of
702:. Time.com. 1968-03-22. Archived from
665:"The second London Gold Pool is dying"
638:
107:General Agreement on Tariffs and Trade
7:
746:. Bank for International Settlements
545:"The Bretton Woods Conference, 1944"
371:. The events of the weekend led the
626:"Lessons from the London Gold Pool"
490:, New York: The Macmillan Company,
435:Bank for International Settlements
25:
921:. London Gold Market Association.
958:, House of Commons Lords Sitting
719:"Money: De Gaulle v. the Dollar"
845:Parliamentary Debates (Hansard)
775:. Federal Reserve. 1968-03-14.
721:. Time and CNN. Archived from
1:
700:"Gold: At the Point of Panic"
663:Adrian Douglas (2008-11-19).
373:Congress of the United States
717:Time Magazine (1965-02-12).
488:The Monetary Sin of the West
95:Bretton Woods, New Hampshire
956:Devaluation of the Sterling
840:, HC Deb vol 760 cc1855-62"
836:"House of Commons Sitting,
99:International Monetary Fund
73:collapsed in 1971 with the
1013:
940:What is The Gold Standard?
862:. Encyclopædia Britannica.
838:London Gold Market Closing
744:"BIS Chronology 1960-1969"
380:trading organization, the
146:. There was still an open
113:which became known as the
894:How We Got Here: The '70s
684:Jake Towne (2009-06-14).
997:1968 in economic history
992:1961 in economic history
172:US presidential election
89:, delegates from the 44
50:by interventions in the
27:Pooling of gold reserves
977:Foreign exchange market
821:. BBC News. 1967-11-18.
807:. BBC News. 1967-11-19.
121:Foreign exchange market
819:"Pound in your pocket"
486:Jacques Rueff (1972),
397:
624:Philip Judge (2001).
445:Gold as an investment
395:
164:US payment imbalances
81:Gold price regulation
706:on November 4, 2012.
586:IMF information site
569:Armand Van Dormael.
194:Member contributions
152:market price of gold
115:Bretton Woods system
44:Bretton Woods System
38:by a group of eight
364:London gold markets
34:was the pooling of
987:Monetary economics
860:"Zürich Gold Pool"
398:
176:US Federal Reserve
52:London gold market
333:
332:
214:
16:(Redirected from
1004:
923:
922:
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878:
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848:. 14 March 1968.
832:
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523:Francis J. Gavin
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382:Zürich Gold Pool
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133:reserve currency
32:London Gold Pool
21:
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180:Bank of England
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877:. p. 7.
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748:. Retrieved
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727:. Retrieved
723:the original
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704:the original
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679:
668:. Retrieved
630:. Retrieved
599:
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579:. Retrieved
575:the original
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553:. Retrieved
549:the original
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460:Price fixing
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406:West Germany
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93:gathered in
87:World War II
84:
70:
68:
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31:
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889:Frum, David
422:bull market
415:Nixon Shock
388:Gold window
320:Switzerland
306:Netherlands
213:(by weight)
156:gold window
148:gold market
125:convertible
75:Nixon Shock
71:gold window
59:gold fixing
18:Gold window
966:Categories
750:2009-11-22
729:2010-09-20
670:2009-11-21
632:2009-11-30
581:2009-11-21
555:2010-09-20
532:References
360:protective
137:troy ounce
48:troy ounce
496:79-182450
231:$ 135 MM
144:commodity
891:(2000).
641:cite web
428:See also
336:Collapse
329:$ 10 MM
315:$ 10 MM
301:$ 10 MM
287:$ 25 MM
273:$ 25 MM
259:$ 25 MM
245:$ 30 MM
178:and the
356:devalue
292:Belgium
236:Germany
204:Country
901:
606:
525:(2002)
494:
264:France
217:Value
210:Amount
791:(PDF)
773:(PDF)
472:Notes
278:Italy
228:120 t
899:ISBN
647:link
604:ISBN
492:LCCN
284:22 t
270:22 t
256:22 t
242:27 t
64:gold
30:The
521:by
326:9 t
312:9 t
298:9 t
239:11%
225:50%
968::
954:,
842:.
827:^
759:^
655:^
643:}}
639:{{
614:^
598:,
417:.
323:4%
309:4%
295:4%
281:9%
267:9%
253:9%
166:.
117:.
54:.
907:.
753:.
732:.
688:.
673:.
649:)
635:.
584:.
558:.
20:)
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