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

Author

Listed:
  • Bordo, Michael
  • Monnet, Eric
  • Naef, Alain

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.

Suggested Citation

  • Bordo, Michael & Monnet, Eric & Naef, Alain, 2019. "The Gold Pool (1961–1968) and the Fall of the Bretton Woods System: Lessons for Central Bank Cooperation," The Journal of Economic History, Cambridge University Press, vol. 79(4), pages 1027-1059, December.
    • Handle: RePEc:cup:jechis:v:79:y:2019:i:4:p:1027-1059_4
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    Cited by:

    1. Flores Zendejas, Juan & Nodari, Gianandrea, 2023. "Central Bank Cooperation 1930-1932, A Reappraisal," Working Papers unige:166877, University of Geneva, Paul Bairoch Institute of Economic History.
    2. repec:cfm:wpaper:240 is not listed on IDEAS
    3. Monnet, Eric & Puy, Damien, 2020. "Do old habits die hard? Central banks and the Bretton Woods gold puzzle," Journal of International Economics, Elsevier, vol. 127(C).
    4. Barry Eichengreen & Camille Macaire & Arnaud Mehl & Eric Monnet & Alain Naef, 2024. "Currency internationalization with Chinese characteristics: Is capital‐account convertibility required for the renminbi to acquire reserve‐currency status?," International Finance, Wiley Blackwell, vol. 27(2), pages 102-128, August.
    5. O'Connor, Fergal A. & Lucey, Brian M., 2023. "The efficiency of the London Gold Fixing: From Gold Standard to hoarded commodity (1919-68)," eabh Papers 23-01, The European Association for Banking and Financial History (EABH).
    6. repec:osf:socarx:p4tbm_v1 is not listed on IDEAS
    7. Monnet, Eric & Velde, François R., 2020. "Money, Banking, and Old-School Historical Economics," CEPR Discussion Papers 15348, C.E.P.R. Discussion Papers.
    8. Guillaume Bazot & Eric Monnet & Matthias Morys, 2024. "Central banks and the absorption of international shocks (1891-2019)," Working Papers halshs-04778323, HAL.
    9. Alain Naef, 2021. "Dirty float or clean intervention? The Bank of England in the foreign exchange market," European Review of Economic History, European Historical Economics Society, vol. 25(1), pages 180-201.
    10. Andrea Giorgio Tosato, 2022. "Considerations on the Monetary Policy Framework of the European Central Bank," CBM Working Papers WP/01/2022, Central Bank of Malta.
    11. Austin Kwon, 2017. "Trends in the Accumulation of Net Foreign Reserves since World War II," Studies in Applied Economics 94, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.
    12. Michael David Bordo, 2021. "Monetary Policy Cooperation/Coordination and Global Financial Crises in Historical Perspective," Open Economies Review, Springer, vol. 32(3), pages 587-611, July.
    13. George Pantelopoulos, 2021. "Exogenous and endogenous sterilisation under managed exchange rates," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 756-779, September.
    14. Cecilia Bao & Emma Paine, 2018. "Insights from the Federal Reserve’s Weekly Balance Sheet, 1942-1975," Studies in Applied Economics 104, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.
    15. Michael D. Bordo & Robert N. McCauley, 2019. "Triffin: Dilemma or Myth?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(4), pages 824-851, December.
    16. Rodrigue Dossou-Cadja, 2025. "The 1992-93 EMS Crisis and the South: Lessons from the Franc Zone System and the 1994 CFA Franc Devaluation," Working Papers 2025.18, International Network for Economic Research - INFER.
    17. Michael D. Bordo, 2020. "Monetary Policy Cooperation/Coordination and Global Financial Crises in Historical Perspective," NBER Working Papers 27898, National Bureau of Economic Research, Inc.
    18. Olivier ACCOMINOTTI & Marie BRIERE & Aurore BURIETZ & Kim OOSTERLINCK & Ariane SZAFARZ, 2020. "Did Globalization Kill Contagion?," Working Papers 2020-ACF-01, IESEG School of Management.
    19. Michael D. Bordo, 2020. "The Imbalances of the Bretton Woods System 1965 to 1973: U.S. Inflation, the Elephant in the Room," Open Economies Review, Springer, vol. 31(1), pages 195-211, February.
    20. Bahaj, Saleem & Reis, Ricardo, 2024. "The anatomy of a peg: lessons from China's parallel currencies," CEPR Discussion Papers 18749, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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