The Smithsonian Agreement was created when the Group of Ten (G-10) states (Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom, and the United States) raised the price of gold to 38 dollars, an 8.5% increase over the previous price at which the US government had promised to redeem dollars for gold.
A negative balance of payments, growing public debt incurred by the Vietnam War and Great Society programs, and monetary inflation by the Federal Reserve caused the dollar to become increasingly overvalued in the 1960s.
Nixon's administration subsequently entered negotiations with industrialized allies to reassess exchange rates following this development.
Although the Smithsonian Agreement was hailed by President Nixon as a fundamental reorganization of international monetary affairs, it failed to encourage discipline by the Federal Reserve or the United States government.
The dollar price in the gold free market continued to cause pressure on its official rate; and soon after a 10% devaluation was announced on 14 February 1973, Japan and the OEEC countries decided to let their currencies float.