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

58 Pages Posted: 17 Nov 2017

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Eric Monnet

Banque de France; Paris School of Economics (PSE)

Alain Naef

University of Cambridge

Multiple version iconThere are 2 versions of this paper

Date Written: November 2017

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.

Keywords: Bretton Woods, central bank cooperation, Gold Pool, international monetary system, reserve currencies, sterling crisis

JEL Classification: E42, F31, F33, N14

Suggested Citation

Bordo, Michael D. and Monnet, Eric and Naef, Alain, The Gold Pool (1961-1968) and the Fall of the Bretton Woods System. Lessons for Central Bank Cooperation (November 2017). CEPR Discussion Paper No. DP12425. Available at SSRN: https://ssrn.com/abstract=3071057

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Eric Monnet

Banque de France ( email )

Paris
France

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Alain Naef

University of Cambridge

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