Nixon Shock and the end of dollar–gold convertibility (August 1971–1973)

  1. Bretton Woods establishes dollar–gold anchor

    Labels: Bretton Woods, U S, Gold convertibility

    Delegates at the Bretton Woods Conference agree on a postwar monetary system of fixed-but-adjustable exchange rates. The U.S. dollar becomes the central anchor, with official convertibility to gold at a fixed price, while other countries peg their currencies to the dollar within agreed bands. This structure sets the stage for later strains when U.S. dollars circulate globally faster than U.S. gold reserves grow.

  2. U.S. faces rising pressure on gold reserves

    Labels: United States, U S, Foreign holdings

    By the 1960s, persistent U.S. overseas spending and investment increase the supply of dollars held abroad. As more dollars sit outside the United States, foreign governments have greater ability to demand gold at the official rate, creating a mismatch between outstanding dollar claims and U.S. gold reserves. These pressures weaken confidence in the system’s core promise: official dollar–gold convertibility.

  3. Germany lets the Deutsche Mark float temporarily

    Labels: West Germany, Deutsche Mark, Currency float

    Speculative flows and repeated intervention to support the dollar increase Germany’s domestic money supply and inflation concerns. In response, West Germany temporarily allows the Deutsche Mark to float rather than maintain the fixed-rate obligation. This step signals that key countries may no longer accept the domestic costs of defending Bretton Woods parities.

  4. Nixon announces New Economic Policy and closes “gold window”

    Labels: Richard Nixon, Gold window, Nixon Shock

    President Richard Nixon announces a package later called the “Nixon Shock,” aimed at inflation, jobs, and the balance of payments. A central element is suspending the dollar’s convertibility into gold for foreign official holders—often described as closing the “gold window.” This unilateral move removes the key mechanism that held the Bretton Woods system together.

  5. Wage–price freeze begins under Executive Order 11615

    Labels: Executive Order, Wage price, United States

    On the same day as the convertibility suspension, Nixon issues an executive order initiating a 90-day stabilization program for prices, rents, wages, and salaries. While not a Bretton Woods rule, this domestic policy is part of the broader attempt to stabilize the U.S. economy and reduce pressure on the dollar. It also shows how international currency strain and domestic inflation policy became tightly linked.

  6. U.S. imposes 10% import surcharge by proclamation

    Labels: Import surcharge, United States, Trade policy

    Nixon proclaims a temporary 10% supplemental duty on dutiable imports, framed as a balance-of-payments measure. The surcharge is intended to pressure trading partners to adjust exchange rates and trade terms in negotiations. This adds a trade-policy lever to what was primarily a monetary crisis.

  7. Smithsonian Agreement realigns currencies, expands trading bands

    Labels: Smithsonian Agreement, Major powers, Currency realignment

    Major industrial countries reach the Smithsonian Agreement in Washington, DC to try to restore a workable fixed-rate system. The agreement includes a devaluation of the U.S. dollar (raising the official dollar price of gold) and wider allowable exchange-rate bands. Although it temporarily re-sets parities, it does not restore credible dollar–gold convertibility and proves short-lived.

  8. Import surcharge ends as part of the Smithsonian deal

    Labels: Import surcharge, Smithsonian Agreement, United States

    After the Smithsonian realignment, the United States terminates the 10% import surcharge that had been used to push partners toward exchange-rate changes. This rollback reflects the trade-off embedded in the December 1971 negotiations: exchange-rate adjustment in return for removing the surcharge. It also underscores that the new arrangement depends on ongoing confidence rather than a return to gold convertibility.

  9. Dollar devalued again as fixed-rate pressures persist

    Labels: Dollar devaluation, United States, Exchange pressures

    Continuing market pressure and persistent imbalances lead to another official dollar devaluation in early 1973, following the failed attempt to stabilize rates under the Smithsonian framework. Repeated devaluations make fixed parities harder to defend because they invite speculation about further changes. The system moves closer to a market-determined (floating) outcome.

  10. Major currencies shift to floating exchange rates

    Labels: Floating exchange, Major currencies, Foreign exchange

    In early March 1973, major countries stop trying to maintain fixed rates against the dollar, and currencies begin to float more freely in foreign-exchange markets. This change effectively ends Bretton Woods in practice by removing the requirement for official interventions to keep rates within narrow bands. Governments still intervene at times, but without a single gold-based anchor and fixed parities.

  11. European “snake” continues after dollar-based tunnel breaks

    Labels: European snake, European Community, Regional arrangement

    Several European Community countries try to limit exchange-rate swings among their currencies through the “snake in the tunnel.” When the dollar-based “tunnel” collapses in March 1973, the arrangement evolves into a mainly intra-European effort to manage currency movements. This shows how regions sought partial stability even as the global fixed-rate system unraveled.

  12. Jamaica meetings agree to reform IMF exchange-rate rules

    Labels: Jamaica Agreements, International Monetary, Gold role

    IMF member officials meeting in Kingston, Jamaica agree on a set of reforms often called the Jamaica Agreements (or Jamaica Accords). The reforms accept that countries may choose different exchange-rate arrangements, including floating, and they move to reduce gold’s formal role in the international monetary system. This provides a legal and institutional framework for the post–Bretton Woods era that began in practice in 1971–1973.

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Last Updated:Jan 1, 1980
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Nixon Shock and the end of dollar–gold convertibility (August 1971–1973)