SMITHSONIAN AGREEMENT in international monetary system

 Smithsonian Agreement (1971-1973)

    A revision the Bretton Woods Accord, was signed at the Smithsonian Institution in Washington, D.C., in December 1971.

  This agreement aimed to maintain fixed Exchange rates, but without using gold, and allowed greater fluctuation between currencies.

While Bretton Woods allowed the dollar to float in a range of 1 percent, the Smithsonian Agreement proposed a range of 2.25 percent.

  The system set out by the Smithsonian Agreement did not work for long and the foreign exchange markets were forced to close in 1972, and when they reopened in 1973 they were no longer bound by the Smithsonian Agreement.