IX International Monetary System
and International Finance
Institutions
Outline
1.
2.
3.
4.
Gold Standard
Bretton Woods System-The US Dollar
Standard (BWS)
Post-Bretton Woods System
International Finance Institutions (IMF, WB,
ADB)
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2
1. Gold Standard (1880-1914)
Concept
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The currency is pegged at a constant rate to gold
The central bank is obliged at any time to change cash
into respective quantity of gold (obligation to
convertibility)
VD: 20,67 USD/ounce (1879)
4,24 GBP/ounce (1818)
Rules of the Gold Standard
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National currencies are defined in gold
The cross rate is defined as well
Lower transaction costs
Gold convertibility
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3
1. Gold Standard (1880-1914)
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The monetary base is backed by gold reserves
Automatic regulation of money supply
Restrictive/expansionary effects depending on the
changes of the gold reserves
Free movement of capital
Necessary for free trade flow
Interest arbitrage
Free export and import of gold
Gold arbitrage (instead of national currencies)
Stabilization of exchange rate
Free movement of goods
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4
Current account imbalance under
Gold Standard
Assumptions
• Two countries Germany (Reichmark-RM) and US (USD)
• The exchange rate is not an instrument of international
economic policy
• The monetary policy is endogenous
• The adjustment of international competitiveness is
achieved via prices
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Negative current account in US (Im>Ex) và positive
current account in Germany (Im- Xem thêm -