Block · Capital controls
End of private gold convertibility
- What it is
- Paper money is made non-redeemable in gold for private holders, leaving gold convertibility (if any) to central banks and governments only, then later withdrawn altogether.
- Why it counts
- Savers can no longer exit the currency into gold at the official parity, so the state can issue money and debt without the discipline of redemption.
When it was in force
- United States: 1934, historical; its end is not documented
- United States: 1971, historical
- United States: 1971, historical
3 examples
United States
1934HistoricalIts end is not documented · As cited: From 30 January 1934
No US currency to be redeemed in gold except as Treasury regulations (approved by the President) permit; gold certificates held by Federal Reserve banks excepted. Gold coinage and payment of gold coin also ended (s.5).
United States today: index 42.9Gold Reserve Act of 30 January 1934, section 6Primary source
“no currency of the United States shall be redeemed in gold”
United States
1971HistoricalAs cited: 15 August 1971
In his 15 August 1971 address Nixon ordered the gold window closed: foreign governments could no longer exchange their dollars for gold.
United States today: index 42.9Nixon address of 15 August 1971 (suspension of dollar convertibility); Fed History accountSecondary source
“Foreign governments could no longer exchange their dollars for gold; in effect, the international monetary system turned into a fiat one.”
United States
1971HistoricalAs cited: 15 August 1971
The President directed Treasury Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions in the interest of monetary stability.
United States today: index 42.9Address to the Nation Outlining a New Economic Policy, 15 August 1971 (Public Papers of the Presidents: Richard Nixon, 1971, item 264, p. 888)Primary source
“I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets”
Examples and their dates reviewed .
Block the exits · a special case
Gold: the exit states close first
1933United States
Executive Order 6102 required everyone in the US to deliver their gold coin, bullion and gold certificates to the Federal Reserve banks or member banks by 1 May 1933.
Compulsory surrender (confiscation) of private gold1934United States
The Gold Reserve Act ended the redemption of US currency in gold, except as Treasury regulations permit.
End of private gold convertibility (this page)
1947United Kingdom
The UK Exchange Control Act obliged everyone in the UK entitled to sell gold to offer it for sale to an authorised dealer, unless the Treasury consented otherwise.
Compulsory surrender (confiscation) of private gold1971United States
President Nixon directed the Treasury to suspend the convertibility of the dollar into gold, so foreign governments could no longer exchange their dollars for gold.
End of private gold convertibility (this page)
1974United States
A US law provided that from 31 December 1974 no rule could stop anyone buying, holding or selling gold, ending the US restrictions on private gold.
Gold ownership limits and licensing of dealing
Also: Gold import and export bans, licences, quotas and punitive duties
More capital controls
Further reading
- Expanding the Landscape of Cross-Border Flow Restrictions: Modern Tools and Historical Perspectives
- Financial engineering is no substitute for interest rates: Lessons from Türkiye
- Argentina: Request for an Extended Arrangement Under the Extended Fund Facility—Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Argentina (IMF Country Report No. 25/95)
- The Aftermath of Debt Surges
7 more on capital controls
- Macroprudential tools, capital controls, and the trilemma: Insights from the Bretton Woods era
- Indian Financial Sector: Structure, Trends and Turns
- The Liquidation of Government Debt
- Capital control measures: A new dataset
- Financial repression: Then and now
- A New Database of Financial Reforms
- Financial Repression and Exchange Rate Management in Developing Countries: Theory and Empirical Evidence for India