The international monetary system before the 1870s can be characterized as “bimetallism” in the sense that both gold and silver were used as international means of payment and that the exchange rates among currencies were determined by either their gold or silver contents.

Greater price stability will result from the larger monetary base

Greater ease in the determination and stabilization of exchange rates among countries using gold, silver, or bimetallic standards will result.

The combination of two metals can provide greater monetary reserves

Because price stability is dependent on more than the type of monetary base, bimetallism does not provide greater stability of prices.

Such a system is wasteful in that the mining, handling, and coinage of two metals is more costly.

It is practically impossible for a single nation to use such a standard without having international cooperation;

The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold

A fixed exchange rate to the gold standard reduces the risk of fluctuations in the prices of imports and exports between countries and promotes international trade.
Under the gold standard, international imbalances of payment will also be corrected automatically.

It creates certainty in international trade by providing a fixed pattern of exchange rates.

It limits inflation due to the limited supply of gold

The gold standard can cause imbalances among the participating countries

It may not provide sufficient flexibility in the supply of money.

Freed from war time pegging, exchange rates among currencies were fluctuating in the early 1920s

USA was able to lift restrictions on gold exports and return to a gold standard in 1919.

[World War I ended the classical gold standard in August 1914, as major countries such as Great Britain, France, Germany and Russia suspended redemption of bank notes in gold and imposed embargoes on gold exports.

In summary, the inter war period was characterized by economic nationalism, half hearted attempts and failures to restore the gold standard, economic and political instabilities, bank failures and panicky flights of capital across boarders.

The IMF then created an artificial international reserve called the SAR in 1970

In July 1994, representatives of 44 nations gathered at BreHon Wooods, New Hansphire, to discuss and design the postwar international monetary system

This agreement was then ratified to launch the IMF in 1945

The Jamaica Agreement include:

Gold was officially abandoned (i.e., demonetized) as an international reserve asset

January 1976 The flexible exchange rate regime that followed the demise of the Bretton Woods system

• Since March 1973, exchange rates have become substantially more volatile than they were under the Bretton Woods system

• The decline of the dollar between 1970 and 1973 represents the transition from the Bretton Woods to the flexible exchange rate system.

The IMF continued to provide assistance to countries facing balance of payments and exchange rate difficulties

• Rise: The US Dollar experienced a major appreciation throughout the first half of the 1980s

Decline and stabilization: The value of the dollar reached its peak in February 1985 and then began a persistent downward drift until it stabilized in 1988.

• 1980: The Reagan administration ushered in a period of growing U.S. budget deficits and balance of payments deficits.

• 2001: began to depreciate due to a sharp stock market correction, the ballooning trade deficits, and the increased political uncertainty

• 2010: began to appreciate, reflecting the recovery of the U.S. economy from the effect of the Great Recession.

• The technological boom caused the dollar to generally appreciated

The currency of another country circulates as the sole legal tender. Adopting such an arrangement implies complete surrender of the monetary authorities' control over the domestic monetary policy. Examples include Ecuador, El Salvador, and Panama.

: A currency board arrangement is a monetary arrangement based on an explicit legislative commitment

Classification as a stabilized arrangement entails a spot market exchange rate that remains within a margin of 2 percent for 6 months or more (with the exception of a specified number of outliers or step adjustments) and is not floating

For this category the country formally (de jure) pegs its currency at a fixed rate to another currency or a basket of currencies

: Classification as a crawling peg involves the confirmation of the country authorities' de jure exchange rate arrangement.

The exchange rate must remain within a restricted margin of 2% compared to a statistically recognized trend for six months or longer

A pegged exchange rate is an exchange rate that is fixed or allowed to fluctuate within a narrow range against another currency or gold

This category is a residual and is used when an exchange rate arrangement does not meet the criteria for any other type.

A floating exchange rate or a flexible exchange rate is an exchange rate that is determined based on the supply-demand relationship in the foreign exchange market.

Free float, also known as a public transfer, refers to a company's stock that can be publicly traded and unrestricted

A fixed exchange rate is a regime applied by a government or central bank that ties the country's official currency exchange rate to another country's currency or the price of gold.

If the value of currencies fluctuates, significantly this can cause problems for firms engaged in trade.

The uncertainty of exchange rate fluctuations can reduce the incentive for firms to invest in export capacity

Governments who allow their exchange rate to devalue may cause inflationary pressures to occur

A rapid appreciation in the exchange rate will badly affect manufacturing firms who export; this may also cause a worsening of the current account