Louvre Accord - Financial definition
Concise definition of the term Louvre Accord
The Louvre Accord is a 1987 agreement among G7 countries aimed at stabilizing exchange rates and halting the decline of the U.S. dollar that followed the Plaza Accord of 1985.
Comprehensive definition of the term Louvre Accord
The Louvre Accord was signed in Paris by finance ministers and central bank governors of the G7 nations—United States, Japan, West Germany, France, United Kingdom, Canada, and Italy—marking a shift from the previous policy of coordinated depreciation of the U.S. dollar to one of exchange rate stabilization. The accord sought to establish target zones for exchange rates and promote economic cooperation to prevent competitive devaluations, enhancing global economic stability.
Practical implications included coordinated intervention in foreign exchange markets and a commitment to policies that would support agreed exchange rate levels. The agreement is considered a precursor to the modern framework of international monetary cooperation and highlights the challenges of balancing national economic policies with global financial stability.