The International Law and Politics of the Financial and Monetary System
Chapter 9: The Bretton Woods collapse: the 1970s
The US large balance of payments deficits and reluctance of Japan and Germany to appreciate their currencies ushered the end of the Bretton Woods and a period of instability in international economic affairs that persists until today. In 1971 the United States closed the gold window. Countries could no longer demand from the US to exchange their dollars for gold. Freeing the dollar from the gold put the United States in the driving seat of international economic developments. However, market participants continued to revere gold. The psychological endurance of gold as a safe-haven asset pushed the United States to come to terms with the risks that threatened the credibility of the dollar as the prime reserve currency.
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