The Bretton Woods era through the exchange rate lens

A good way to visualize the effects of the international monetary system during the Bretton Wood era is to plot exchange rates over a long run period for the 19 members of the euro area. The Bretton Wood system has its own contradictions which ultimately led to its end, as explained in the well known Triffin dilemma. It remains interesting to have in mind that the current monetary arrangements in the euro area may be considered as a legacy of the Bretton Wood era. In figure 1, the exchange rate is converted in euro before the monetary unification with the entry rates. A decrease of the exchange rate means that a smaller amount of domestic currency is required to buy one USD. Thus, it corresponds to an appreciation of the domestic currency. Interestingly, you can note that the current euro exchange rate vis-à-vis the US dollar is lower than in the Bretton Woods era for four countries, namely, Germany, Austria, the Netherlands and Luxembourg.

The data are retrieved from the FRED database with the following keywords: ‘Exchange Rate (market+estimated)’. It is more convenient to create an account and to create a data list. After the data list is created, you can download the data in an Excel zipped file. On the most recent version of Excel, you can save your graphic in an SVG format. The original source is Penn World Table version 10.0 which is now available.

Figure 1. Bilateral exchange rate against USD over the last 70 years

Further readings

  • Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2015), “The Next Generation of the Penn World Table” American Economic Review, 105(10), 3150-3182, available for download at
  • Bordo, M. (2017), The operation and demise of the Bretton Woods system: 1958 to 1971, VoxEU / CEPR, NBER

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