Breakdown of Global Parity System
Nixon's Plan to Bring About Monetary Reform
President nixon's decision to suspend the convertibility of the dollar into gold has launched the world monetary system on uncharted waters. For a quarter-century, the American dollar—which foreign governments could exchange for gold at $35 an ounce—had been the yardstick against which all free world currencies had been measured. Suddenly, it was as if that yardstick had turned to rubber, capable of being expanded or contracted at will. Nixon made it clear that his intention was to prompt “an urgently needed reform” of the rules governing international payments. The President's timing was appropriate. His announcement of the gold embargo on Aug. 15 came just 45 days before the 118-nation International Monetary Fund was scheduled ...