international monetary system part 1
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Transcript of international monetary system part 1
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THETHE
INTERNATIONALINTERNATIONAL
MONETARY SYSTEMSMONETARY SYSTEMS
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International Monetary Systems
are sets of internationally agreed rules, conventions and supportinginstitutions that facilitate international trade, cross borderinvestment and generally the reallocation of capital between nation
states. They provide means of payment acceptable between buyers andsellers of different nationality, including deferred payment. To operatesuccessfully, they need to inspire confidence, to provide sufficientliquidity for fluctuating levels of trade and to provide means by whichglobal imbalances can be corrected.
can grow organically as the collective result of numerous individualagreements between international economic actors spread overseveral decades. Alternatively, they can arise from a singlearchitectural vision as happened at Bretton Woods in 1944.
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ROLE AND DRIVE FOR NEED
THE
INTERNATIONAL MONETARY SYSTEMS
Just as people in different countries speak different languages,they also transact business in different currencies, requiringconversion from one type of money to another.
The International Monetary System comprises the set of rulesand practices that govern how debts are honored and paidbetween and among nations with different national moneys.
When the system is functioning smoothly, all countries gain
from international flows of goods, services, and capital thesystem is an intl public good. But when it breaks down or ispoorly organized, nations are unable to sustain high levels oftrade and investment.
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Balance of International
Payments
Refers to a countrys summary statement of
all imports of goods, services and capital items,paid for by the nation, as measured against the
value of all its exports of goods, services and
capital items.
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Balance of International Payments' Principle
When the value of all foreign
receipts exceeds the value of allpayments to foreign countries, the
balance is said to be favorable.
When the payments abroadexceed the receipts, the balance
of payments is to be unfavorable to
the countr .
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The Graham Commodity-Reserve-Currency
Proposal
Increasing the official price of gold for
international monetary reserves
The Keynes Plan for an International CentralBank
The International Monetary Fund
Proposals for International Monetary ReformsProposals for International Monetary Reforms
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THE
INTERNATIONAL MONETARY
FUND
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an organization of 187 countries, working to foster global
monetary cooperation, secure financial stability, facilitate
international trade, promote high employment and
sustainable economic growth, and reduce poverty around
the world. www.imf.org set up in 1944 to lower trade barriers between countries and to
stabilize currencies by monitoring the foreign exchange systems of
member countries, and lending money to developing nations.
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The IMF supports its membership by providing:
policy advice to governments and central banks based on
analysis of economic trends and cross-country experiences;
research, statistics, forecasts, and analysis based on tracking ofglobal, regional, and individual economies and markets;
loans to help countries overcome economic difficulties;
concessional loans to help fight poverty in developing countries;and
technical assistance and training to help countries improve the
management of their economies.
IMF Key ActivitiesIMF Key Activities
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provide a forum for cooperation on international monetary
problems
facilitate the growth of international trade, thus promotingjob creation, economic growth, and poverty reduction;
promote exchange rate stability and an open system of
international payments; and
lend countries foreign exchange when needed, on a
temporary basis and under adequate safeguards, to help
them address balance of payments problems.
IMF AIMSIMF AIMS
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The Reduced Role of Gold under the Second Amendment to the ArticlesThe Reduced Role of Gold under the Second Amendment to the Articles
of Agreement of the International Monetary Fundof Agreement of the International Monetary Fund
Gold is removed from the central position it occupies
in the Funds present Articles by:
Breaking the link b/w gold & SDR;
Prohibiting the use of gold as a peg for a currency
under any future exchange arrangements, including par
value system;
By requiring the Fund in any dealings in gold, to avoid
actions that would manage the price in the market or
establish a fixed price.
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