Bretton Woods, swap lines, and the Federal Reserve’s return to intervention
AbstractThis paper describes the United States’ first line of defense against shortcomings in the Bretton Woods system, which threatened the system’s continuation as early as 1960. The exposition describes the Federal Reserve’s use of swap lines both to provide cover for central banks’ unwanted dollar exposures, thereby forestalling claims on the U.S. gold stock, and to supply dollar liquidity to countries facing temporary balance-of-payments deficits, thereby bolstering confidence in their parities. As suggested by the expansion and growing use of the swap lines, the operations failed to distinguish between temporary and fundamental disequilibrium forces. In substituting temporary for fundamental adjustments, the lines ultimately proved inadequate.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 1232.
Date of creation: 2012
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
- NEP-CBA-2013-01-07 (Central Banking)
- NEP-HIS-2013-01-07 (Business, Economic & Financial History)
- NEP-HPE-2013-01-07 (History & Philosophy of Economics)
- NEP-MON-2013-01-07 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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National Bureau of Economic Research, Inc.
- Michael D. Bordo, 1993. "The Bretton Woods International Monetary System: An Historical Overview," NBER Working Papers 4033, National Bureau of Economic Research, Inc.
- Michael D. Bordo & Owen F. Humpage & Anna J. Schwartz, 2011.
"U.S. Intervention During the Bretton Woods Era: 1962-1973,"
NBER Working Papers
16946, National Bureau of Economic Research, Inc.
- Michael D. Bordo & Owen F. Humpage & Anna J. Schwartz, 2011. "U.S. intervention during the Bretton Wood Era:1962-1973," Working Paper 1108, Federal Reserve Bank of Cleveland.
- B. Dianne Pauls, 1990. "U.S. exchange rate policy: Bretton Woods to present," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Nov, pages 891-908.
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