Professor Jonathan Kirshner (Boston College) and Dr László Andor, FEPS Secretary General, mark in this podcast episode the 50th anniversary of the “Nixon shock”, the day when the convertibility of the US dollar to gold was suddenly ended. They discuss how in the post-war decades great imbalances developed in the global financial system which eventually brought the Bretton Woods currency arrangements to an end. This regime change is considered as a critical step by many economic historians which then motivated Western Europe to seek a greater monetary stability through deeper integration (creating the EMS and the EMU).
For the euro to play a stronger international role, and serve as a pillar of strategic autonomy, Prof Kirshner points to criteria outlined in the optimum currency area theory: having a more robust common fiscal policy but less barriers to labour mobility. A return to gold should not be considered (could only lead to deflationary bias).
Kirshner and Andor also elaborate on the personality of President Nixon, surrounded by influential figures like Henry Kissinger, Milton Friedman and John Connally – neither of whom encouraged Nixon to sacrifice domestic priorities for stabilising the international order or multilateral institutions. The conversation ends with an update of the reading list and even cinema recommendations related to political economy.