Overall, US efforts did not succeed in balancing its external accounts.3 The second run
on the dollar occurred in 1967, prompting the Fed to raise interest rates to attract foreign
funds and dampen the economy. While capital controls were limiting outflows by banks,
they responded to higher rates by bringing in funds from their foreign branches for lending
in the USA. But, as rates declined, US banks ignored the voluntary restraint programme
and moved funds back to the Euromarket—a move that prompted the next dollar crisis in
1969 and what was called a monetary ‘jolt’ as the French franc devalued by 10% and
speculative flows pushed up the value of the deutschmark by 10%. The countries of the
European Economic Community (EEC) responded to the renewed turmoil by imposing
capital controls and recommending a revival of the credit system for settling balances under
the 1950s Payments Union (Kindleberger, 1984).