DP12425 The Gold Pool (1961-1968) and the fall of the Bretton Woods system. Lessons for central bank cooperation.

Author(s): Michael D Bordo, Eric Monnet, Alain Naef
Publication Date: November 2017
Keyword(s): Bretton Woods, central bank cooperation, Gold Pool, international monetary system, reserve currencies, sterling crisis
JEL(s): E42, F31, F33, N14
Programme Areas: Economic History, International Macroeconomics and Finance
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12425

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.