Exchange Stabilization Fund - ESF

You keep an emergency fund in case things get wonky and you need a few extra dollars: a savings account, a piggy bank, a shoebox filled with gold coins buried in the backyard. The Exchange Stabilization Fund works on the same principle, except that the emergency in question involves the value of the dollar in foreign exchange markets.

The ESF was first set up in the 1930s, when The Great Depression forced the U.S. government to abandon a strict gold standard. The dollar would vary in value against other world currencies (like it still does today). To make sure the government could step in to prevent sudden, harmful swings in the value of the dollar, it set up the ESF.