Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
country. A sound currency system must maintain stability of the external value of the currency. The system must be economical. The currency must be elastic and automatic. The currency system must be simple.
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.
gold and silver were used as money. Some countries were on the gold standard, some on the silver standard, some on both. 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. Greshams Law implied that it would be the least valuable metal that would tend to circulate.
coinage. There was two-way convertibility between gold and national currencies at a stable ratio. Gold could be freely exported or imported. The exchange rate between two countrys currencies would be determined by their relative gold contents.
For example, if the dollar is pegged to gold at U.S.$30 = 1 ounce of gold, and the British pound is pegged to gold at 6 = 1 ounce of gold, it must be the case that the exchange rate is determined by the relative gold contents:$30 = 6 $5 = 1
gold standard as an international monetary system worked well until world war 1 interrupted trade flows and disturbed the stability of exchange rates for currencies of major countries. There was a widespread fluctuation in currencies in terms of gold standard in early 1920s. As countries began to recover from the war and stabilize their economies, they made several attempts to return to the gold standard.
standard, they were made to restore the gold standard, but participants lacked the political will to follow the rules of the game. U.K had experienced hyper inflation because of World war 1, it leads to imbalance in the exchange rates. The pounds overvaluation was not only the major problem of the restored gold standard, other problems included the failure of the other countries to act responsibly.
adjustment mechanism has been decreased over a period of time in many countries. Thus the inter-war period was characterized by halfhearted attempts and failure to restore the gold standard, economic and political instabilities, widely fluctuating exchange rates are the failure to regain the gold standard.
Woods, New Hampshire. The purpose was to design a postwar international monetary system. The goal was exchange rate stability without the gold standard. The result was the creation of the IMF and the World Bank.
development
Fixed exchange rates pegged to the US
Dollar
US Dollar pegged to gold at $35 per ounce
the World Bank ( International bank for reconstruction and development ). The basic role of IMF would be to help countries with balance of payment and exchange rate problem while the world bank would help countries with post-war reconstruction and general economic development. 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.
Par Value
U.S. dollar
Gold
Pegged at $35/oz.
National governments had to manage inflation through their money supply flexibility Provides loans to help members states with temporary balance-of-payment deficit; Allows time to bring down inflation Excessive drawing from IMF funds came with IMF supervision of monetary and fiscal policies Allowed to 10% devaluations and more with IMF approval.
Bank (IBRD) role (International Bank for Reconstruction & Development) Refinanced post-WWII reconstruction and development Provides low-interest long term loans to developing economies The International Development Agency (IDA), an arm of the bank created in 1960 Raises funds from member states Loans only to poorest countries 50 year repayment at 1% per year interest.
dollar-based gold exchange standard. The Bretton woods system worked without major changes from 1947 till 1971. During this period, the fixed exchange rates were maintained by official intervention in the foreign exchange markets.
changes from 1947 till 1971. The system, however, suffered from a number of inherent structural problems. In the first place, there was much imbalance in the roles and responsibilities of the surplus and deficit nations. The countries with persistent deficit balance of payments had to undergo tight and stringent economic policy measure if they want to take help of IMF
IMF to the balance of payments disequilibria situation. U.S. high inflation rate. U.S.$ depreciated sharply.
US dollar was devalued and dealers started
speculating against it for further devaluation Bretton Woods fixed exchange rates abandoned in January 1972