In the absence of results from the Group of Ten ministerial meeting, Mr. Schweitzer presented the Executive Directors, on the weekend prior to the annual meeting, with a proposal for a decision for its presentation to the Governing Council. Executive Directors discussed the draft decision at unusual meetings of the office during the week of the general meeting on Monday and Tuesday afternoons, September 27 and 28. Most supported the Director General`s attempt to find a resolution from the governors. But precise language proved elusive and controversial. Mr. Dale presented a draft that ended any implication that the difficult monetary situation was caused by complaints from the U.S. monetary authorities and in which there was no indication that monetary convertibility could be restored once the exchange rate adjustment took place. The Board of Directors approved a revised draft resolution adopted by the Governing Council on Friday, October 1, 1971, the last day of the annual meeting.7 The United States persuaded the G-10 countries to reach an agreement in which they would maintain their dollar-linked exchange rates. However, the dollar would not be tied to gold. So it was essentially a Bretton Woods agreement, minus the support for gold.
In addition, some freedoms were granted to central banks, since the value of their currency could vary to 2.5% plus or minus the value of the dollar before their central banks carried out open market transactions. President Nixon took the world out of the gold standard in 1971. He feared, however, that free market operations on foreign exchange markets in many currencies would lead to necessity and devaluation. As a result, he convinced many countries to enter into an agreement called the Smithsonian Agreement. This agreement had largely failed since it lasted less than a few years and ended with the total suspension of the foreign exchange markets! There was another idea that regulated the attitude of the U.S. monetary authorities towards a devaluation of the dollar – that an appropriate reorientation of the dollar against the currencies of other industrialized countries had to be much more important than what those countries were prepared to accept. In her view, it was imperative to turn the U.S. deficit into a surplus, at least for a few years. If the dollar were to be devalued in 1971 and the magnitude of the devaluation proved too low, perhaps because other countries would not be willing to accept a sufficiently significant change, it would be extremely difficult and undermine confidence in the dollar to revalue it at a later date. On 13 September 1971, shortly before the Group of Ten ministerial meeting, the finance ministers of the COMMUNITY countries agreed on the common position they would adopt at the meeting. This position included, among other things, the need to redirect the currencies of all industrialized countries, including the dollar, against gold and to eliminate the U.S.
import surcharge. Differences of opinion between the industrialized countries have meant that the merger of the finance ministers and central bank governors of the Group of Ten on 15 and 16 September did little to succeed, except in general.