The internetional monetary system docx

CHAPTER 2 THE INTERNATIONAL MONETARY SYSTEM Chapter Objectives: 1. Evolution of the International Monetary System 2. International institutions systems 3. International financial adjustment Chapter Objectives: 1. Evolution of the International Monetary System 2. International institutions systems 3. International financial adjustment 12/19/2010 1 B02013 - The international Monetary system 1. Evolution of the International Monetary System • Bimetallism: Before 1875 • Classical Gold Standard: 1875-1914 • Interwar Period: 1915-1944 • Bretton Woods System: 1945-1972 • The Flexible Exchange Rate Regime: 1973- Present • Bimetallism: Before 1875 • Classical Gold Standard: 1875-1914 • Interwar Period: 1915-1944 • Bretton Woods System: 1945-1972 • The Flexible Exchange Rate Regime: 1973- Present 12/19/2010 2 B02013 - The international Monetary system 1.1. Bimetallism: Before 1875 • A “double standard” in the sense that both gold and silver were used as money. • Both gold and silver were used as international means of payment and the exchange rates among currencies were determined by either their gold or silver contents. • A “double standard” in the sense that both gold and silver were used as money. • Both gold and silver were used as international means of payment and the exchange rates among currencies were determined by either their gold or silver contents. 12/19/2010 3 B02013 - The international Monetary system 1.2. Classical Gold Standard: 1875-1914 • During this period in most major countries. • The exchange rate between two country’s currencies would be determined by their relative gold contents. • During this period in most major countries. • The exchange rate between two country’s currencies would be determined by their relative gold contents. 12/19/2010 4 B02013 - The international Monetary system 1.3. Interwar Period: 1915-1944 • Exchange rates fluctuated as countries widely used “predatory” depreciations of their currencies as a means of gaining advantage in the world export market. 12/19/2010 5 B02013 - The international Monetary system 1.4. The Bretton Woods system • Under the Bretton Woods system, the U.S. dollar was pegged to gold at $35 per ounce and other currencies were pegged to the U.S. dollar. • The Bretton Woods system was a dollar-based gold exchange standard. • Under the Bretton Woods system, the U.S. dollar was pegged to gold at $35 per ounce and other currencies were pegged to the U.S. dollar. • The Bretton Woods system was a dollar-based gold exchange standard. 12/19/2010 6 B02013 - The international Monetary system 1.5.The Flexible Exchange Rate Regime: 1973-Present • Flexible exchange rates were declared acceptable to the IMF members. • Gold was abandoned as an international reserve asset. • Flexible exchange rates were declared acceptable to the IMF members. • Gold was abandoned as an international reserve asset. 12/19/2010 7 B02013 - The international Monetary system 2. International institutions systems 2.1.The financial institutions: • Stock market • All funds: superannuation, Mutual Funds… • Banks • Financial institutions of government. 2.1.The financial institutions: • Stock market • All funds: superannuation, Mutual Funds… • Banks • Financial institutions of government. 12/19/2010 8 B02013 - The international Monetary system 2.2. International institutions: - Eurocurrency market - Bank for international settlements - World Bank - International Finance Corporation - International Development Association (IDA) - International Monetary Fund (IMF) - Asian Development Bank 2.2. International institutions: - Eurocurrency market - Bank for international settlements - World Bank - International Finance Corporation - International Development Association (IDA) - International Monetary Fund (IMF) - Asian Development Bank 12/19/2010 9 B02013 - The international Monetary system 3. International financial adjustment 3.1. Structural Adjustment Facilities. 3.2. The Basel Committee on Banking Supervision 3.3. International banking facilities (IBF) 3.4. IMF conditionality 3.1. Structural Adjustment Facilities. 3.2. The Basel Committee on Banking Supervision 3.3. International banking facilities (IBF) 3.4. IMF conditionality 12/19/2010 10 B02013 - The international Monetary system . of their currencies as a means of gaining advantage in the world export market. 12/19/2010 5 B02013 - The international Monetary system 1.4. The Bretton Woods system • Under the Bretton Woods system, . Evolution of the International Monetary System 2. International institutions systems 3. International financial adjustment 12/19/2010 1 B02013 - The international Monetary system 1. Evolution of the International. CHAPTER 2 THE INTERNATIONAL MONETARY SYSTEM Chapter Objectives: 1. Evolution of the International Monetary System 2. International institutions systems 3. International financial