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The International Monetary and Financial Order, Post-Bretton Woods 1971…
The International Monetary and Financial Order
International Monetary System (IMS)
Integrated set of money
flows and related governance institutions
Establishes:
Quantities of money
Supporting currency requirements and the basis for exchange
among currencies
Operating system of the financial environment
Provides the institutional framework for:
1.Determining the rules and procedures for international payments,
Determination of exchange rates,
determination of the movement of capital
Actors part of the IMS
Central banks
International financial institutions
3.Commercial banks
Money market funds
Open markets for currency & government bonds
Multinational corporations
7.Investors
It does not generates interest
Money is used:
As a unit of account
To support and foster the exchange of goods and services and capital flows
As a medium of exchange
Calibrate values and advance the
exchange of financial assets
To foster the development of financial markets.
International Financial System (IFS)
Lies at the heart of the global credit
creation and allocation process.
Constitutes:
Full range of interest‐ and
return‐bearing assets,
Bank and nonbank financial institutions,
Financial markets
that trade and determine the prices of these assets
Nonmarket activities through which the exchange
of financial assets can take place.
IFS depends on:
The effective functioning and prudent
management of the IMS
The availability of currencies to support the
payment system.
The IFS embraces full range of financial assets
Derivatives
Credit classe
Institutions and regulatory-governing bodies.
Government debt links the IFS & IMS
It functions as “near money” in a zero interest rate environment.
Policy Implications = different policy responses
IMS events are often about the
availability of liquidity (US dollar liquidity) to meet current payment obligations
IMS events can be resolved
primarily through central bank action and common agreement
IFS crises are more complex and far reaching.
They can involve regulatory and
reporting changes and they have significant and enduring economic effects.
Central banks can be asked to play a role as
“lender of last resort.”
IGO´S
International Monetary Fund
Ensure the stability of the international monetary system, the system of exchange rates and the international payments
World Bank
Works in every major area of development, providing a wide array of financial products and technical assistance, helping countries share and apply innovative knowledge and solutions to the challenges they face.
Bretton Woods 1944-1971
New Development Bank (NDB)
Mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies, as well as in developing countries
It will:
Strengthen cooperation among BRICS
Supplement the efforts of multilateral and regional financial institutions for global development
Contribute to collective commitments for achieving the goal of strong, sustainable and balanced growth.
Bank of International Settlements (BIS)
Mission:
Support central banks' pursuit of monetary and financial stability through international cooperation
Act as a bank for central banks
Provides central banks with:
A forum for dialogue and broad international cooperation
A platform for responsible innovation and knowledge-sharing
In-depth analysis and insights on core policy issues
Sound and competitive financial services
Post-Bretton Woods 1971-Now-a-days
Trilateral Commission 1973
To confront challenges posed by the growing interdependence of the United States and its principal allies and to encourage greater cooperation between them.
Headed by three regional chairs: Europe, North America & Asia-Pacific
Principles of representation
Economic weight
reflected in the varying membership quotas assigned to each country.
Political influence
Reflects powerful commercial and political interests committed to
Stronger collective management of global problems
Private enterprise
sources:
https://www.chathamhouse.org/sites/default/files/field/field_document/0212gt_fosler.pdf
https://www.sciencedirect.com/topics/economics-econometrics-and-finance/international-monetary-system
https://www.britannica.com/topic/Trilateral-Commission
https://www.ndb.int/about-us/essence/history/
https://www.bis.org/about/index.htm