Patricio Goldstein

We interpret the 1971–1973 collapse of Bretton Woods as a sequence of reverse speculative attacks driven by the incompatibility of asymmetric monetary policies, capital mobility, and fixed dollar parities. In a two-country model with faster US domestic credit growth and no US foreign-exchange intervention, the peg survives only while foreign central banks absorb the excess supply of dollars as international reserves. A ceiling on their dollar holdings triggers the attack: reserves accumulate abroad rather than run down in the US. The model matches the crises’ timing and reserve and inflation dynamics; archival evidence supports this interpretation, which extends to the 1992–1993 EMS crises.