Smithsonian Agreement


Also found in: Wikipedia.

Smithsonian Agreement

A revision to the Bretton Woods international monetary system that was signed at the Smithsonian Institution in Washington, D.C., in December 1971. Included were a new set of par values, widened bands to +/- 2.25% of par, and an increase in the official value of gold to US$38.00 per ounce.

Smithsonian Agreement

A December 1971 agreement between 10 nations that effectively ended the Bretton Woods System. Because of high government spending due to the Vietnam War and the Great Society program, the U.S. dollar became overvalued and was under significant inflationary pressure. In August 1971, President Richard Nixon unilaterally devalued the dollar and ended the ability to exchange it for gold. The Smithsonian Agreement formalized this act as the participating nations agreed to allow their currencies to appreciate relative to the dollar. While this Agreement kept the Bretton Woods System in place, the precedent led to its final abandonment in 1973.
References in periodicals archive ?
After the Bretton-Woods Accord came the Smithsonian Agreement in December of 1971.
The collapse of the Smithsonian agreement and the European Joint Float in1973 signified the official switch to the free-floating system.
President Richard Nixon hailed the 1971 Smithsonian agreement as "the most significant monetary agreement in the history of the world.
At the time of the December 1971 Smithsonian Agreement, 308 yen to the dollar was supposed to do the trick.
Only after the dollar had been declared inconvertible into gold, had been devalued in the Smithsonian Agreement, and still was under downward pressure in exchange markets, did U.
A system of fixed parities among the currencies of the G-10 countries was re-established through a negotiated realignment of exchange rates in the Smithsonian Agreement of December 1971.
As downward pressure on the dollar continued after the Smithsonian Agreement, and the United States refrained from intervening to defend the dollar, market participants began to doubt that foreign monetary authorities would continue to buy inconvertible dollars.
Full browser ?