Plaza Accord
The Plaza Accord was an agreement reached on September 22, 1985, by the finance ministers and central bank governors of the Group of Five (G-5) nations: the United States, Japan, Germany, France, and the United Kingdom.
The accord aimed to address the issue of the undervalued U.S. dollar and its effect on global trade imbalances.
Under the accord, the G-5 nations agreed to coordinate their economic policies and intervene in the foreign exchange markets to bring down the value of the U.S. dollar against other major currencies, including the Japanese yen and the German mark.
This was intended to make American exports more competitive and reduce the U.S. trade deficit.
The Plaza Accord led to a sharp appreciation of the yen and the mark against the dollar, which had significant consequences for the global economy.
Japan, in particular, faced a surge of capital inflows that contributed to the economic bubble and subsequent crash of the late 1980s and early 1990s.
While the Plaza Accord was initially seen as a success, some critics argue that it contributed to the economic problems of the 1990s, including Japan's lost decade and the global financial crisis of 2008.
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