At the end of World War II, and throughout the 1950s, the world
demanded dollars for use as an international reserve. During this time,
U.S. balance of payments deficits provided the world with a much-needed
source of growth for international reserves. As the rest of the world
developed and matured, over time U.S. liabilities to foreigners greatly
exceeded the gold reserve backing these liabilities. Yet as long as the
increase in demand for these dollar reserves equaled the supply, the lack
of gold backing was irrelevant. Through the late 1960s, U.S. political and
economic events began to cause problems for the dollar’s international
standing, and the continuing U.S. deficits were not matched by a growing
demand, so that pressure to convert dollars into gold resulted in the dollar
being declared officially no longer exchangeable for gold in August 1971.