What was a significant change to currency management following the collapse of the Bretton Woods system in the 1970s?

The significant change to currency management that occurred following the collapse of the Bretton Woods system in the 1970s was the implementation of free-floating currency values based on market conditions. This shift represented a move away from the fixed exchange rates that characterized the Bretton Woods system, where currencies were pegged to the US dollar, which in turn was convertible to gold. With the collapse, countries shifted towards allowing market forces—supply and demand—to determine their currency values.

This transition to free-floating currencies means that exchange rates can fluctuate in response to economic indicators, geopolitical events, and market speculation, making currency management more dynamic and reflective of real-time economic conditions. The flexibility associated with free-floating currencies has enabled countries to respond more effectively to economic changes, but it has also introduced new challenges regarding volatility and exchange rate risks.

Establishing fixed exchange rates and introducing a gold standard are contrary to the developments following Bretton Woods, as these approaches imply a return to rigid currency management and direct monetary controls that were deemed unmanageable post-collapse. The notion of government-controlled currencies also does not accurately capture the essence of the change that occurred; instead, the focus was on relinquishing tight controls in favor of market-driven principles.