The Plaza Accord, signed on 22 September 1985 among the G7 nations (with the exception of Canada and Italy) and the Louvre Accord
, signed in February 1987, are but two examples of the United States seeking to salvage its own economy.
Unlike the 1985 Plaza Accord that focused on "exchange rate levels," the general policy emphasis since the 1987 Louvre Accord
has rightly been on managing "exchange rate volatility.
The subsequent Louvre Accord
of February 22, 1987 set up informal target zones for the dollar against the yen and the Deutsche mark, zones that were definitively breached after the October 1987 stock market crash.
intervention operations, however, have taken place since the Louvre Accord
of February 1987; since then U.
In 1987, the international adjustment process to the large current account imbalances was featured by two events: the Louvre accord
in February and the stock market crash in mid-October.
As the dollar moved to levels not seen since the February 1987 Louvre Accord
, market participants increasingly came to question the will of the G-7 monetary authorities to half the dollar's rise.
In spite of the fact that the Tokyo declaration chose the expression, "countries whose currencies constitute the SDR" and did not use the "G5" designation, the G5 meeting was held first for the Louvre Accord
in February 1987, and the G7 was treated as a forum for ex post facto authorization.
The concept of target zones as adopted in the Louvre Accord
in 1987 was another major success though under the term "reference rates," because Deputy Treasury Secretary Richard Darman said he couldn't call it the same thing we called it.
Proposals for exchange rate coordination among the major currencies have been still-born since the Louvre Accord
because they both promise too much and require too much of the issuing governments.
By 1985 it signed the Louvre accord
to try to prevent the dollar from falling too far.
Some observers of that arrangement, especially in Japan, have blamed the subsequent asset bubble in that country on the Louvre accord
If the new approach turned out to be too successful, in the sense that the dollar threatened to decline too fast or too far, the G7 could simply intervene on the other side of the market to buy dollars, just as the Louvre Accord
in 1987 stopped the fall of the dollar triggered by the Plaza Agreement, when it seemed to accelerate too sharply.