The InternationalMonetarv SvstemChapter one
ChapterObjective:This chapter serves to introduce thestudentto theinstitutional frameworkwithin which:International payments are made.The movement of capital is accommodated Exchange rates are determined
Chapter Objective: ❖This chapter serves to introduce the student to the institutional framework within which: ▪ International payments are made. ▪ The movement of capital is accommodated. ▪ Exchange rates are determined
Chapter OutlineEvolutionof the International MonetarySystemCurrent Exchange Rate ArrangementsEuroandthe EuropeanMonetaryUnionFixed versus Flexible Exchange RateRegimes
❖Evolution of the International Monetary System ❖Current Exchange Rate Arrangements ❖Euro and the European Monetary Union ❖Fixed versus Flexible Exchange Rate Regimes Chapter Outline
Evolutionof theInternational Monetary SystemBimetallism:Before 1875ClassicalGold Standard:1875-1914lnterwar Period: 1915-1944BrettonWoodsSystem:1945-1972The Experience of the FloatingExchange Rates, 1973-Present
Evolution of the International Monetary System ❖Bimetallism: Before 1875 ❖Classical Gold Standard: 1875-1914 ❖Interwar Period: 1915-1944 ❖Bretton Woods System: 1945-1972 ❖The Experience of the Floating Exchange Rates, 1973-Present
Bimetallism:Before1875*A"double standard" in the sense that both gold andsilver were used as money.Some countries were on the gold standard, some onthe silver standard, some on both.Both gold and silver were used as internationalmeans of payment and the exchange rates amongcurrencies were determinedby eithertheirgold orsilver contents.Gresham'sLawimpliedthat itwould be theleastvaluable metalthat wouldtendtocirculate
Bimetallism: Before 1875 ❖A “double standard” in the sense that both gold and silver were used as money. ❖Some countries were on the gold standard, some on the silver standard, some on both. ❖Both gold and silver were used as international means of payment and the exchange rates among currencies were determined by either their gold or silver contents. ❖Gresham’s Law implied that it would be the least valuable metal that would tend to circulate