U.S. intervention during the Bretton Wood Era:1962-1973

Michael Bordo, Owen Humpage and Anna Schwartz

No 1108, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

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.

Keywords: Banks and banking, Central; Foreign exchange administration; Federal Open Market Committee; Gold; Bretton Woods Agreements Act (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cba, nep-his and nep-ifn
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Chapter: US Intervention during the Bretton Woods Era, 1962–1973 (2015)
Working Paper: U.S. Intervention During the Bretton Woods Era: 1962-1973 (2011)
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