Under the dominance of flexible exchange rate regimes , the foreign exchange markets became significantly more volatile . In 1980 , newly elected U.S. President Ronald Reagan 's administration brought about increasing balance of payments deficits and budget deficits . To finance these deficits , the United States offered artificially high real interest rates to attract large inflows of foreign capital . As foreign investors ' demand for U.S. dollars grew , the dollar 's value appreciated substantially until reaching its peak in February 1985 . The U.S. trade deficit grew to $ 160 billion in 1985 ( $ 341 billion in 2012 dollars ) as a result of the dollar 's strong appreciation . The G5 met in September 1985 at the Plaza Hotel in New York City and agreed that the dollar should depreciate against the major currencies to resolve the United States ' trade deficit and pledged to support this goal with concerted foreign exchange market interventions , in what became known as the Plaza Accord . The U.S. dollar continued to depreciate , but industrialized nations became increasingly concerned that it would decline too heavily and that exchange rate volatility would increase . To address these concerns , the G7 ( now G8 ) held a summit in Paris in 1987 , where they agreed to pursue improved exchange rate stability and better coordinate their macroeconomic policies , in what became known as the Louvre Accord . This accord became the provenance of the managed float regime by which central banks jointly intervene to resolve under - and overvaluations in the foreign exchange market to stabilize otherwise freely floating currencies . Exchange rates stabilized following the embrace of managed floating during the 1990s , with a strong U.S. economic performance from 1997 to 2000 during the Dot-com bubble . After the 2000 stock market correction of the Dot-com bubble the country 's trade deficit grew , the September 11 attacks increased political uncertainties , and the dollar began to depreciate in 2001
September 11 attacks
September 11 attacks
Global financial system