Monetary System
Name : Monetary System.
Category : Finance
Files Source: www.faculty.washington.edu
File Added : August 27, 2010
Size : 166 KB
Download : 607
This online presentation talk about Relationship between monetary system and foreign exchange rates, Historical development, Fixed vs floating exchange rates, Role of the IMF and World Bank, and Implications for managers.
Content summary :
* Currency exchange rates depend on the structure of the international monetary system
* In 2003 of all IMF members currencies
o Only 19% were free floating
o 25% were managed float
o 8% were adjustable peg
o 22% were fixed peg
o 4% were fixed by a currency board
o 22% were not currency of their own (use Euro, US Dollar)
* Gold Standard: currencies pegged to gold value
o Convertibility guaranteed
o By 1880 most on gold standard
o Balance of trade equilibrium for all countries
+ Value of exports should equal value of imports
+ Flow of gold used to make up differences
o Abandoned in 1914
+ Failed resumption after WWI
+ Great Depression
* 44 countries met to design a new system in 1944
* Established:
International Monetary Fund (IMF) and World Bank
o IMF: maintain order in monetary system
o World Bank: promote general economic development
o Fixed exchange rates pegged to the US Dollar
o US Dollar pegged to gold at $35 per ounce
o Countries maintained their currencies ± 1% of the fixed rate; buy/sell own currency to maintain level…………………….” Download for more information!!
