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The Gold Pool (1961–1968) and the Fall of the Bretton Woods System: Lessons for Central Bank Cooperation

Published online by Cambridge University Press:  17 September 2019

Michael Bordo ,
Eric Monnet  and
Alain Naef
Michael Bordo
Affiliation:
Professor, Department of Economics, Rutgers University, New Jersey Hall, 75 Hamilton Street, New Brunswick, NJ 08901 and NBER. E-mail: bordo@econ.rutgers.edu.
Eric Monnet
Affiliation:
Research Economist, Bank of France, Paris School of Economics and CEPR 46-1383 DGEI-DCPM-DIACONJ 31 rue Croix des Petits Champs, 75049 Paris Cedex 01, France. E-mail: eric.monnet@psemail.eu.
Alain Naef
Affiliation:
Postdoctoral Fellow, University of California, Berkeley, Department of Economics, Evans Hall, Berkeley CA 94720. E-mail: alain.naef@berkeley.edu.
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Abstract

The Gold Pool was probably the most ambitious case of central bank cooperation in history. Major central banks pooled interventions to stabilize the dollar price of gold. Why did it collapse? From at least 1964, the fate of the Pool was, in fact, tied to sterling, the first line of defense for the dollar. Sterling’s devaluation in November 1967 eventually spurred speculation and unbearable losses for the Pool. Inflationary U.S. policies were weakening confidence in the dollar. The demise of the Pool provides a striking example of contagion between reserve currencies and the limits of central bank cooperation.

Type
Article
Information
The Journal of Economic History , Volume 79 , Issue 4 , December 2019 , pp. 1027 - 1059
Copyright
© The Economic History Association 2019 

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Footnotes

The views expressed in this paper do not represent the opinion of the Banque de France, Eurosystem, or the National Bureau of Economic Research. We thank the archivists of the Bank for International Settlements, the Bank of England, the New York Fed and the Banque de France for their help. Piet Clement kindly shared by email some additional documents. Kathleen Rasmussen guided us to the U.S. Department of State online archives. We are grateful to seminar participants at the University Paris 1 Sorbonne, the credit, currency, and commerce conference (University of Cambridge), Saint Louis Fed, Paris School of Economics, the Cleveland Fed, UC Berkeley, UC Davis, and World Cliometrics Congress for comments. We are indebted to Pierre-Cyrille Hautcoeur, Pierre Sicsic, Owen Humpage, Walter Jansson, Robert McCauley, James Foreman-Peck, Barry Eichengreen, Brad DeLong, Christy Romer, Chris Meissner, Peter Lindert, Alan Taylor, and Catherine Schenk for helpful comments on previous drafts. We also thank David Chambers and Olivier Accominotti for sharing data.

References

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