15 Aug 2021 marked 50 years since the collapse of the Bretton Woods system.
The Bretton Woods system provided for a system of fixed exchange rates and ensured member currencies were easily interchangeable. To do that, member nations would peg their currencies to the US dollar, which, in turn, was pegged to the value of its gold reserves.
In 1971, countries began to demand for gold instead of US dollars, threatening to drain the US’ gold reserves. The then-President Richard Nixon, at the stroke of the pen, severed the link between US dollars to gold, unleashing the Nixon Shock across international financial systems.
In this short video, we at the Hugo Team explain how the Brettons Woods system came about, what it set out to do, and why, 50 years on, the effects of the Bretton Woods system collapse is still felt today.