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The Gold Pool (1961-1968) and the fall of the Bretton Woods system. Lessons for central bank cooperation

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

Abstract

The Gold Pool (1961-1968) was one of the most ambitious cases of central bank cooperation in history. Major central banks pooled interventions – sharing profits and losses – 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 unsuccessful devaluation in November 1967 spurred speculation and massive losses for the Pool. Contagion occurred because US policies were inflationary and insufficiently credible as well. The demise of the Pool provides a striking example of contagion between reserve currencies.

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  • Monnet, Eric & Bordo, Michael & Naef, Alain, 2017. "The Gold Pool (1961-1968) and the fall of the Bretton Woods system. Lessons for central bank cooperation," CEPR Discussion Papers 12425, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12425
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    3. 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).
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    5. 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).
    6. 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.
    7. George Pantelopoulos, 2021. "Exogenous and endogenous sterilisation under managed exchange rates," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 756-779, September.
    8. 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.
    9. 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.
    10. Oosterlinck, Kim & Accominotti, Olivier & BRIERE, Marie & Burietz, Aurore & Szafarz, Ariane, 2020. "Did Globalization Kill Contagion?," CEPR Discussion Papers 14395, C.E.P.R. Discussion Papers.
    11. 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.
    12. Kwon, Austin, 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.
    13. 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.
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    16. 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.

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    More about this item

    Keywords

    Gold pool; Bretton woods; Reserve currencies; Central bank cooperation; International monetary system; Sterling crisis;
    All these keywords.

    JEL classification:

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

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