agreement by members of the group of ten countries in December 1971 to adopt floating exchange rates. The conference, held at the Smithsonian Institution in Washington, D.C., was prompted by the collapse of the fixed exchange rates that had existed since 1944 under the Bretton Woods agreement, and indirectly by the decision of the United States to abandon the gold exchange standard. The Smithsonian conference led to an agreement in 1972 by the members of the european community to limit currency movements within a narrow band called the snake, which attempted to manage currency fluctuations in the European Community by pegging exchange rates to the strongest currency in the EEC.
December 1971 agreement that ended the fixed exchange rate established at the Bretton Woods Conference of 1944 and substituted a floating exchange rate. In the Agreement, the group of ten countries, meeting at the Smithsonian Institution, agreed to appreciate their currencies against the United States dollar. This became necessary when the United States removed the gold backing of the dollar in August 1971.
