us went off the gold standard, but still allowed foreign governments to trade gold for dollars in 1971.
us went off the gold standard, but still allowed foreign governments to trade gold for dollars in 1971.
when did the us go off the gold standard, but still allowed foreign governments to trade gold for dollars?
1971
Na
Na
these gold deposits would become known as federal reserve deposits and quickly lost their 100% gold backing. during the fed's inception, the fed needed only to back gold deposits by 35%. this created a very dangerous situation because if more than 35% of banks demanded their federal reserve deposits as gold, then the fed would be insolvent. such a crisis did happen in 1933 and federal reserve deposits (as well as federal reserve notes) lost their gold backing. foreign governments were still allowed to be on the gold standard and their federal reserve deposits were still redeemable in gold. but these too were only fractionally backed. this inevitably led to another gold run in 1971, led by heavy withdrawals by switzerland (51 million) and france (191 million). nixon chose instead of heavily devaluing the dollar against gold, to simply remove the us from the international gold standard.
federal reserve deposits