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As they study to boost an international career in finance, experts learn about the effects of international agreements such as Bretton Woods and the institutions they have created. Developing a strong international financial strategy means anticipating the impact of central bank announcements and actions, managed in the same way by national governments and international bodies. The only currency strong enough to meet the growing demands for international currency transactions was the U.S. dollar. The strength of the U.S. economy, the strong relationship of the dollar with gold ($35 per ounce) and the U.S. government`s commitment to convert the dollar to gold at this price have made the dollar as good as gold. In fact, the dollar was better than gold: it earned interest and was more flexible than gold. Prasad agrees that the liquidity of the dollar will strengthen it internationally. “The Fed`s obvious generosity to give other countries access to dollar financing secured by its U.S. Treasury bond holdings will drive countries even deeper into the dollar`s catch,” he said. “The Fed`s granting abundant dollar liquidity to foreign central banks through currency exchange lines and Treasuries-backed lines of credit will strengthen the dollar`s dominance in global finance.” The devaluation plan backfired.

It caused a rush to U.S. gold reserves at Fort Knox, when people traded their dollars for fast-depreciating gold. In 1971, Nixon completely detracted from the value of the gold dollar. Without price controls, gold quickly pulled to $120 an ounce on the open market, ending the Bretton Woods system. As part of the agreement, countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar. If a country`s monetary value became too low against the dollar, the bank would buy its currency back on the foreign exchange markets. , as it is now known, was printed in 1914 when the Federal Reserve Bank was established. Less than six decades later, the dollar has officially become the world`s reserve currency.

The accession to the throne did not begin, however, long after the ink on the first print was dried in 1914.