Louvre Accord

[1] The Plaza Accord is recognized as the precursor to the Louvre Accord and this deal was struck to depreciate the US dollar for the purpose of exchange rate realignment with the Japanese yen[3] and German Deutsche Mark, which was agreed upon during the G7 Minister of Finance meeting held in New York in 1985.

[4] The then U.S. Treasury Secretary James Baker attempted to address the imbalance by encouraging its trade partners to stimulate their economies so they can purchase more from it.

[5] The ministers of the G7 nations gathered at the French finance ministry, then located inside the Louvre Palace in Paris, to minimize this decline and stabilize it around the prevailing levels.

[6] France agreed to reduce its budget deficits by 1% of GDP and cut taxes by the same amount for corporations and individuals.

Germany, the real object of this agreement because of its leading economic position in Europe, would reduce public spending, cut taxes for individuals and corporations, and keep interest rates low.