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Currencies

Currency adrift: 50 years after the Nixon shock

Floating exchange rate makes the global economy both more developed and more vulnerable

Faced with a shortage of gold and inflation, in 1971, U.S. President Richard Nixon shocked the world by announcing the U.S. would suspend the exchange of gold for dollars.   © AP

TOKYO -- Fifty years ago marked a turning point in global monetary history. On Aug. 15, 1971, U.S. President Richard Nixon abandoned the gold standard. The "Nixon shock" led to the system of floating exchange rates, spurring the development of the global economy in the postwar era but also touching off frequent crises in developing countries.

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