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The Smithsonian Agreement

Posted By: TradersLog

A revision to the Bretton Woods Accord, signed at the Smithsonian Institution in Washington, D.C., in December 1971. This agreement aimed to maintain fixed exchange rates, but without using gold, and to allow greater fluctuation between currencies. While Bretton Woods allowed the dollar to float in a range of 1 percent, the Smithsonian Agreement proposed a range of 2.25 percent. The system set out by the Smithsonian Agreement did not work – the foreign exchange markets were forced to close in 1972, and when they reopened in 1973 they were no longer bound by the Smithsonian Agreement.

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