Author: Manolis Anastopoulos. An excerpt of Assignment, International Finance, University of Leicester.

Bretton Woods. Όταν η λέξη fixed αντικαταστάθηκε από την floating στις ισοτιμίες των νομισμάτων, αλλά και η σχέση με το χρυσό.

Μήπως η κατάρρευση του συστήματος Bretton Woods (1971) ήταν ο προάγγελος της εμφάνισης των λανθασμένων επιλογών στην «χρήση» του χρήματος; Μήπως ήταν η αρχή της εκτεταμένης χρήσης του «αέρα» στον χρηματοπιστωτικό τομέα; Μήπως ήταν αυτό που έλλειπε για να εμφανιστεί το speculation στην σύγχρονη μορφή του; Μήπως έτσι ξεκίνησε η υπερεκτίμηση των «πραγματικών» αγοραστικών δυνατοτήτων μας; Μήπως έτσι οδηγηθήκαμε στις προβληματικές σχέσεις χρέους/ΑΕΠ; Μήπως ήταν η αρχή της απώλειας του ελέγχου της οικονομίας από την οικονομία; Μήπως έτσι γενικώς χαθήκαμε;

---

Τhe Bretton Woods agreement

In the 22nd of July 1944, at Bretton Woods in the United States of America, 44 countries agreed that a broad international action is necessary to maintain an international monetary system, which will promote foreign trade.

To this respect it was established a worldwide system of fixed exchange rates between currencies. Actually, the ‘tool’ was the gold, with following quota: one ounce of gold to be worth US dollars 35.

Then all other currencies were pegged to the US dollar at a fixed exchange rate.

As stated in an article ‘The End Of the "Fixed" Dollar’ , by the beginning of the 1960s, the US dollar 35 = 1 oz. gold ratio was becoming more and more difficult to sustain. Gold demand was rising and U.S. Gold reserves were falling.

Τhe collapse of the  agreement

On August 15, 1971, the USA President Nixon, repudiated the international obligation of the U.S to redeem its Dollar in gold. Nixon ends convertibility of US Dollar to gold.

By the end of 1974, gold had soared from $35 to $195 an ounce.

Since the collapse of the Bretton Woods agreement (February 1973), the world's currencies "floated" with respect to the US dollar.

Thus, the foreign exchange rate regime changed from a ‘fixed exchange rate’ to a ‘flexible or floating exchange rate’. A system in which, exchange rates are determined by supply and demand that is called ‘clean float’ or where governments through central banks intervene (buy and sell currencies) in the markets, which is called ‘dirty float’.