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The International Monetary System (IMS) - p210-222 image - Coggle…
The International Monetary System (IMS) - p210-222
What is the IMS
:question:
A system that establishes rules for which countries value their currency
What is Balance of Payment (BOP)
:question:
Records international transactions
Supplies vital information
Health of different country's economies
Detects likely changes in economies fiscal or monetary policies
Helps detect signs of trouble ie gouvernemental trade restrictions
Gold standard
Firms or individuals agree to buy or sell their paper currency for gold off any individual or firm
Currencies were pegged against gold standard
Currency prices didn't change too often
Gold standard collapsed due to economic pressures from the great depression
In 1931 the pound was able to float - prices were determined by supply & demand
1821-1918
British pound was the dominant currency due to the British empire
This period is often called a sterling-based gold standard
The international Bank for reconstruction & development - IBRD
EST 1945
The goal was to help finance the reconstruction of war torn Europe
1950
Once Europe goal was achieved, it then moved to developing countries
IBRD made up of 3 affiliated organisations
International development association - IDA :check:
Offers soft loans
Soft loans are loans that bare some significance of not being paid
Aimed at developing countries
EST 1960
International Finance Corporation - IFC :check:
Promotes private sector development
EST 1956
Multilateral Investment Guarantee Agency - MIGA :check:
Provides political risk insurance
EST 1988
Makes hard loans
only makes a loan if they is a likelihood of them getting repaid
The Bretton Woods era
A system of payments based on the dollar
It was gold
Common currency is the dollar because of how stable it is economically
Par value
Face value or fixed monetary worth or nominal value
Floating of currencies began in 1971
Special Drawing Rights
Sometimes referred as paper gold
Designed to settle IMF transactions
Designed to inject liquidity into international monetary system
Aids in reducing the demand of the dollar as a reserve currency
1976
Countries were allowed to adopt any exchange rate system to best met its own requirements
