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What role does the USA play?

After World War I ended, the gold standard at the time (see “The role of money”), which was suspended during the war, was replaced at the Genoa Conference (1922) by a gold exchange standard with the USD and the GBP. This meant no less than that from then on the GBP and the USD could also be recorded as official currency reserves in addition to gold. The next conference took place in July 1944, in Bretton Woods (USA), at which the GBP was eliminated as a reserve currency and the USD was designated as the sole global reserve currency apart from gold. This gold exchange standard functioned in such a way that the United States had to be ready at all times to repay debt accumulated in USD on demand in gold if so requested by a creditor nation.

This last anchor was also abandoned in 1971, under President Richard Nixon, when he refused to exchange additional gold for outstanding USD foreign debt. The reason for this was that the USA was already virtually bankrupt at the time. From then on, the world had to accept that only the USD qualified as the sole reserve currency. This privilege allowed the Americans to consume as much from abroad as they could cover with USD produced with the printing press.