<P> After World War I, governments and banks generally still promised to convert notes and coins into their underlying nominal commodity (redemption in specie, typically gold) on demand . However, the costs of the war and the required repairs and economic growth based on government borrowing afterward made governments suspend redemption in specie . Some governments were careful of avoiding sovereign default but not wary of the consequences of paying debts by consigning newly printed cash which had no metal - backed standard to their creditors, which led to hyperinflation--for example the hyperinflation in the Weimar Republic . </P> <P> From 1944 to 1971, the Bretton Woods agreement fixed the value of 35 United States dollars to one troy ounce of gold . Other currencies were pegged to the U.S. dollar at fixed rates . The U.S. promised to redeem dollars in gold to other central banks . Trade imbalances were corrected by gold reserve exchanges or by loans from the International Monetary Fund . </P> <P> The Bretton Woods system collapsed in what became known as the Nixon Shock . This was a series of economic measures taken by United States President Richard Nixon in 1971, including unilaterally canceling the direct convertibility of the United States dollar to gold . Since then, a system of national fiat monies has been used globally, with freely floating exchange rates between the major currencies . </P> <P> A central bank introduces new money into the economy by purchasing financial assets or lending money to financial institutions . Commercial banks then redeploy or repurpose this base money by credit creation through fractional reserve banking, which expands the total supply of broad money (cash plus demand deposits). </P>

When did the us dollar become part of a total fiat system