The institute was founded by C. Fred Bergsten in 1981, in response to a proposal from the German Marshall Fund (GMF). The President of the GMF, Frank Loy, as well as the President of the Council on Foreign Relations, Leslie Gelb, asked Bergsten to create a research institution focused on assessing the growing importance of the international economy in light of recent geopolitical events. During the 1970s, President Richard Nixon ended the link to the gold standard, the first oil shock occurred in 1973, and the first G5 summit convened. As a result, the new PIIE sought to conduct policy-oriented research on international economic issues by bringing together experts, academics, and policymakers.