Nixon Shock


DEFINITION of 'Nixon Shock'

A term used to describe the actions taken by former U.S. President Richard Nixon in 1971 that eventually led to the collapse of the Bretton Woods system. The policies imposed and the actions taken by President Nixon included imposing a 90-day wage and price freeze in America, a 10% import surcharge and, most notably, closing the gold window, effectively making the U.S. dollar inconvertible to gold.


The ramifications of Nixon Shock rocked the global economic landscape. By closing the gold window, the United States made it impossible for other nations to peg their currency to the gold standard, which was the underlying principle behind the Bretton Woods system. As a direct result of the economic policies imposed by the United States at the time, the gold standard was all but abandoned and the world's major currencies began to float.

  1. Currency

    Currency is a generally accepted form of money, including coins ...
  2. International Monetary Fund - IMF

    An international organization created for the purpose of standardizing ...
  3. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by ...
  4. Gold Standard

    A monetary system in which a country's government allows its ...
  5. Fixed Exchange Rate

    A country's exchange rate regime under which the government or ...
  6. Bretton Woods Agreement

    A landmark system for monetary and exchange rate management established ...
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