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The United States acted unilaterally to terminate the Bretton Woods monetary system in August 1971 , and international exchange rate management went from a regime of fixed to floating parities , much to the displeasure of the membership of the European Community . The Nixon , Ford , and Carter administrations adopted policies that heavily benefited U .S . reform objectives and domestic economic goals , which frequently clashed with allied concerns , and damaged American monetary relations with France and West Germany . Yet , the inability of France and the Federal Republic of Germany to form cohesive economic and monetary policies throughout international negotiations or within the European Community (EC ) , allowed American desires to dictate the path and pace of European integration .
France and Germany attempted , with limited success , to influence U .S . monetary policy through bilateral diplomacy during years of exchange rate fluctuations , dollar devaluations , oil shocks , and payments deficits . Finally , President Valery Giscard d'Estaing and Chancellor Helmut Schmidt created the European Monetary System (EMS ) in 1979 , reversing the trend of half -hearted attempts at European integration so relevant the decade before . The EMS detached the EC's currencies from the dollar's control , was compatible with the reformed international monetary system , advanced a more independent European monetary identity , and formed the base for future monetary integration . As a result , the EMS , as the birthplace of the Euro , the single European currency launched in 2002 , may soon rival the dollar's position as the primary reserve currency .
American monetary policies designed to improve the health of the dollar during the 1970s were a catalyst for European integration . However , as the European Union deepens its economic integration and the Euro grows in strength , it seems that U .S . policies created a regime and a currency that will challenge its dominant position in international monetary affairs . |
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