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From gold to floating currencies

Britain's 1816 Coinage Act put the country on gold. After World War II came the Bretton Woods systemThe post-war system of fixed exchange rates tied to the dollar. (1944). It pegged (fixed) other currencies to the dollar, and the dollar to gold at $35 an ounce.

In 1971 the US stopped converting dollars to gold, and by 1973 currencies floated. That floating world is today's Forex (currencies) market.

A modern reminder that pegs can break: in January 2015 the Swiss National Bank dropped its EUR/CHF floor without warning.

Timeline for this chapter

1. 1717 / 1816 / 1821 · From gold to floating currencies
   Britain moved onto a de facto gold standard after the 1717 guinea valuation. The 1816 Coinage Act made gold the standard, and gold convertibility took effect in 1821. royalmint.com
2. 23 Dec 1913 · From gold to floating currencies
   The Federal Reserve Act was signed, creating the Federal Reserve System and the Federal Reserve note. federalreservehistory.org
3. July 1944 · From gold to floating currencies
   Bretton Woods (44 nations): currencies pegged to the US dollar, and the dollar convertible into gold at $35/oz. federalreservehistory.org
4. 15 Aug 1971 · From gold to floating currencies
   Nixon shock: the US President suspended dollar-gold convertibility ("closing the gold window"); fixed rates collapsed by 1973, leading to floating FX. federalreservehistory.org
5. 19 Oct 1973 · From gold to floating currencies
   The OAPEC oil embargo on the US: oil went from $2.90 to $11.65/bbl by Jan 1974; the embargo was lifted in March 1974. federalreservehistory.org
6. 1978–1980 · From gold to floating currencies
   Second oil shock (Iranian Revolution): oil more than doubled between April 1979 and April 1980; US CPI inflation reached ~9% by end-1979, part of the 1970s stagflation. The Fed raised the funds rate to a peak of ~19% (1981), and inflation fell to ~4% by end-1982 at the cost of a severe recession. federalreservehistory.org
7. 22 Sept 1985 · From gold to floating currencies
   Plaza Accord: the G5 (France, West Germany, Japan, UK, US) stated that 'some further orderly appreciation of the main non-dollar currencies against the dollar is desirable'. g7.utoronto.ca
8. 16 Sept 1992 · From gold to floating currencies
   Black Wednesday: the UK suspended sterling's membership of the ERM after intervention and rate rises failed. bankofengland.co.uk
9. 1 Jan 1999 / 1 Jan 2002 · From gold to floating currencies
   The euro was introduced as book money in 1999; notes and coins entered circulation on 1 Jan 2002. ecb.europa.eu
10. 5 Jun 2014 · From gold to floating currencies
    Negative rates: the ECB cut its deposit facility rate to −0.10% (effective 11 June 2014), the first major central bank to do so. Danmarks Nationalbank had already set a −0.20% certificate-of-deposit rate from 6 July 2012. ecb.europa.eu, nationalbanken.dk
11. 15 Jan 2015 · From gold to floating currencies
    The Swiss National Bank discontinued the EUR/CHF 1.20 floor and cut its deposit rate to −0.75%. snb.ch
12. 2022–2023 · From gold to floating currencies
    Inflation and rate hikes: US CPI peaked at 9.1% y/y (June 2022, highest since Nov 1981). The Fed hiked from 16 Mar 2022 (+25bp), including +75bp on 16 Jun 2022, reaching 5.25–5.50% on 26 Jul 2023. bls.gov, federalreserve.gov, federalreserve.gov

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