The Gold Pool was an international gold control syndicated created in 1961. It brought together most western countries to defend the London gold price. The syndicate was secret to start with, but quickly rumours of its existence spread. And it helped stabilise the price of gold in London.

The Fed was keen the cooperate with the Bank from early in the 1960s. The Bank on the other hand took time to warm up and share information with colleagues at the Fed. But progressively swaps became a key feature of the United Kingdom's exchange management strategy. They offered cheap and discreet short-term dollar loans. The Bank started to use and abuse these loans to manage sterling.

London and sterling were still protected from international capital markets until 1954. But once the official London gold market reopened, everything changed. Now London was a barometer for the health of the Bretton Woods system. And American policymakers would do everything they could to keep that barometer under control.

There was a new sheriff in town with the election of Nixon. Cooperation between the Fed and the Bank was now monitored from Washington. The Fed could no longer provide the Bank with generous loans. And then Nixon pulled the plug on the Bretton Woods system, ending almost two centuries of relatively stable fixed exchange rate systems to improve his political legacy. Sterling came out of this crisis surprisingly well and appreciated against the dollar.

1958 marked the introduction of convertibility. While still not completely free, transferring sterling across countries was easier. This led to the end of parallel markets in Zurich. These were now integrated into a global sterling market.

In 1992, the United Kingdom had reluctantly joined the ERM, mainly to help with inflation management at home. But in the wake of the Maastricht referendum in France, pressure mounted on sterling and other European currencies. The Government did not want to ease the pressure by increasing interest rates. This would have displeased mortgage owners that voted it in. The small tension turned into a full currency crisis. Following remarks by the Bundesbank president, the Bank had to spend $22 billion yet failed to save the pound. Britain left the ERM and stopped managing the pound altogether. The focus was now no longer on exchange rates but on inflation targeting.

In 1992, the UK had reluctantly joined the ERM, mainly to help with inflation management at home. But in the wake of the Maastricht referendum in France, pressure mounted on sterling and other European currencies. The Government did not want to ease the pressure by increasing interest rates. This would have displeased mortgage owners that voted it in. The small tension turned into a full currency crisis. Following remarks by the Bundesbank president, the Bank had to spend $22bn yet failed to save the pound. Britain left the ERM and stopped managing the pound altogether. The focus was now on inflation targeting, no longer exchange rates.

In December 1951, the London foreign exchange market reopened. Now, London was again connected with international capital markets. But capital controls remained, and sterling was not yet integrated into other capital markets. Data from alternative markets show that sterling in London was still isolated from international crises.

In 1967, the inevitable happened. Sterling was devalued. But the currency did not fall alone. It took along with it the international price of gold. The gold price surged, and this put doubts on the stability of the Bretton Woods system. The Gold Pool also collapsed.

The events of 1949 changed exchange rates across Europe. It was initiated in the United Kingdom. The crisis burst because of speculation through leads and lags, a hidden form of speculation. Expecting a devaluation, importers and exporters changed their terms of trade.

The Bank spent most days on the foreign exchange market. In the early years of the Bretton Woods system, it still had complete control over the exchange rate. This chapter shows how successful the Bank's interventions were. It also gives an idea of the strength of the Bank compared to the size of the market.

Far from improving the situation of sterling, the 1967 devaluation made things worse. Currency dealers were now more nervous. There was more volatility and stress on London currency markets. The Bank was also running out of reserves and decided to creatively hide its reserves losses using window dressing.