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U.S. Intervention During the Bretton Woods Era: 1962-1973

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  • Michael D. Bordo
  • Owen F. Humpage
  • Anna J. Schwartz

Abstract

By the early 1960s, outstanding U.S. dollar liabilities began to exceed the U.S. gold stock, suggesting that the United States could not completely maintain its pledge to convert dollars into gold at the official price. This raised uncertainty about the Bretton Woods parity grid, and speculation seemed to grow. In response, the Federal Reserve instituted a series of swap lines to provide central banks with cover for unwanted, but temporary accumulations of dollars and to provide foreign central banks with dollar funds to finance their own interventions. The Treasury also began intervening in the market. The operations often forestalled gold losses, but in so doing, delayed the need to solve Bretton Woods’ fundamental underlying problems. In addition, the institutional arrangements forged between the Federal Reserve and the U.S. Treasury raised important questions bearing on Federal Reserve independence.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16946.

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Date of creation: Apr 2011
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Handle: RePEc:nbr:nberwo:16946

Note: DAE ME
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  1. Michael D. Bordo & Dominique Simard & Eugene White, 1994. "France and the Bretton Woods International Monetary System: 1960-1968," NBER Working Papers 4642, National Bureau of Economic Research, Inc.
  2. Michael Bordo & Ali Dib & Lawrence Schembri, 2007. "Canada's Pioneering Experience with a Flexible Exchange Rate in the 1950s: (Hard) Lessons Learned for Monetary Policy in a Small Open Economy," Working Papers 07-45, Bank of Canada.
  3. Michael D. Bordo & Barry Eichengreen, 2008. "Bretton Woods and the Great Inflation," NBER Working Papers 14532, National Bureau of Economic Research, Inc.
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Cited by:
  1. Rockoff, Hugh & White, Eugene N., 2012. "Monetary Regimes and Policy on a Global Scale: The Oeuvre of Michael D. Bordo," MPRA Paper 49672, University Library of Munich, Germany, revised May 2013.
  2. Michael D. Bordo & Owen F. Humpage & Anna J. Schwartz, 2012. "Bretton Woods, swap lines, and the Federal Reserve’s return to intervention," Working Paper 1232, Federal Reserve Bank of Cleveland.
  3. Owen F. Humpage & Sanchita Mukherjee, 2013. "Even keel and the Great Inflation," Working Paper 1315, Federal Reserve Bank of Cleveland.

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