Table of contents:
Video: The monetary system of the world: from the gold standard to the current state of affairs
2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:44
The monetary system of the world is a form of organization of monetary relations that have developed at this stage of market development. Its origin is associated with the emergence of money and the beginning of their functioning as a means of settlement in the international payment turnover.
The evolution of the monetary system has become a completely natural phenomenon, without which the development of the world economy would be impossible. Both the introduction and abandonment of the gold standard is a response to the demands of the times, as well as confirmation of the cyclical nature of human history and the world economy.
Stages of development of the international monetary system and their features
1. The gold standard system (1821-1939), under which any currency had to be backed by gold. The banks of each country were obliged to ensure the free conversion of their money into precious metal at the request of the client. The monetary system assumed fixed exchange rates fixed for each individual monetary unit. Of course, this had a positive effect on the development of trade between countries andinternational investment due to the stabilization of the economic situation. Nevertheless, this currency system had a number of shortcomings, which led to the fact that on the eve of World War II it had to be abandoned. Among them is the dependence of the well-being of the population not on the development of the economy, but on an increase or decrease in gold mining, as well as the impossibility of countries to pursue an independent monetary policy.
2. Bretton Woods system (1944-1976). This currency system assumed already floating exchange rates, which allowed them to respond to changes in market conditions. The rate of all currencies was fixed in US dollars, and the American government had to ensure the exchange of its currency for gold. It was during this period that such an influential international monetary and financial organization as the IMF was created, the main purpose of which is precisely the development of trade between countries, as well as cooperation between them in the field of monetary relations. However, over time, it turned out that governments were not at all interested in adjusting the exchange rates of their monetary units, and the proper level of liquidity could no longer be provided. In addition, dependence on the United States was also not pleasant for many countries.
3. In 1976, it was decided to move to the Jamaican currency system, according to which the exchange rate of any currency is determined by the law of supply and demand. The modern monetary system involvesindependent determination by the Central Bank of the state of the exchange rate regime, which allows for its long-term flexibility and short-term stability, which favorably affects the development of trade and finance. The disadvantages of the Jamaican monetary system include: high inflation, sharp changes in exchange rates and the volatility of the economic situation in the market. In this regard, the leaders of each country should pay much more attention to strategic and operational planning, because now the well-being of the population depends only on their coordinated actions.
Recommended:
Demonetization of gold is a gradual process of gold losing its monetary functions: causes, stages and consequences
Demonetization of gold is when gold ceases or has ceased to be used as a means of payment. This is a natural process, since many of the properties of gold, which previously gave it significance, have become inconvenient for many. Gold has not ceased to be highly valued, but it has lost its former value
Black market: essence, types and current state of affairs
Where there are some permissions, there are prohibitions, and prohibitions always cause a desire to get around them. One of the integral parts of the economy is the black market. What it is, whether it has any advantages for the country and individual citizens, and how participants in such trade are punished, will be analyzed in this article
Ukraine's gold reserves. Gold and foreign exchange reserves of Ukraine
Ukraine's gold reserves as of March 2015 amounted to 26 tons of gold. In just one year, it has almost halved. The country's government staged a global sale of the precious metal and almost completely depleted the "financial safety cushion"
Germany's gold reserves gone? Where is Germany's gold reserves today?
The story of the German gold reserves has been going on for more than a year now. If someone has not heard yet, then Germany demanded that the United States and France return part of the reserves to it. The latter have been in storage with these countries for more than a dozen years. And how did they even get there? And why does the United States refuse to return what is not rightfully theirs?
The British monetary system. Pound sterling rate. UK banking system
The British monetary system is one of the oldest in the world. During the years of its existence, it has experienced many shocks: two world wars, crises, inflation. But one thing has always remained unchanged - the pound sterling