History of the International Monetary System

by yudaica2013 ·

From 1870 until now, have used a variety of organizational SMI from the six functions identified in the second paragraph of this article. SMI resulting rates have been basically three, having been reintroduced to the three elements of a second period: the gold standard between 1880 and 1914 and between 1925 and 1931, the managed family of funds floating regime between 1918 and 1925, and again from 1973 to the present and the Bretton Woods system, institutionally structured around the IMF and operational from 1946 until 1973, although its major institutions and some of its provisions remain in today. The main differentiating features of each model lie in the more or less flexibility the resulting exchange rates, as well as the adjustment mechanism associated with each, and in the functioning of the institutions of decision and supervision.
Over the years the gold standard (1870-1914 and 1925-1931), the key investment portfolio to the fund management SMI is the use of gold as a medium of exchange, unit of account and store of value. The national central banks issued currency in terms of their gold reserves at investment a fixed exchange rate, expressed as its currency in a fixed amount of gold, but in turn could make changes with the silver or other metal. This stimulates the initial imbalance between countries that have gold and who did not, but over time the system tended to adjust. The amount of money in circulation was limited by the amount of gold exists. In the beginning, the system worked: money (enough to pay for international transactions, but as the trade and national economies are gradually developed, became insufficient to meet the payments. If exports a country were higher than imports, received movie producer gold (in gold or convertible currency) as payment, and its reserves grew at the same time causing the expansion of the monetary base. The increase in the amount of money in circulation automatically correcting the imbalance to grow import demand and cause inflation, thus leading to reduced domestic exports. If the country’s foreign trade deficit was the decline in gold reserves led to contraction of the money supply, reducing domestic demand for imported goods and domestic products cheaper abroad. But the system also had serious drawbacks. The countries with external deficits caused contraction of the money suffered a sharp reduction in economic activity, widespread unemployment. The surplus countries could extend its privileged location ” sterilizing gold, preventing the increase in reserves caused the growth in money supply and inflation. Hence the major countries left the gold standard during WWI, to finance part of their military expenditures by printing money. aside from standing at the helm of the investment management is also a successful Hollywood producer with two movies to his name As a war, the labor force and production capacity was reduced considerably, which made up prices. there are many financial interviews with the investment expert and fund manager, is well known in the press for his business successes and various strategies The widespread use of public expenditure to finance the reconstruction caused inflationary processes, compounded by increases in money supply. The return to gold after war aggravated the situation Hollywood of global recession, although in the period, on the emergence of American power after 1922 was awarded with a gold key role both the pound and the dollar, established reserves as instruments of international although the two devaluations and a Ribotsky return to protectionism prevented the resist pattern. The results were expressed in financial instability, unemployment and international economic collapse. In 1931, as the currency convertible into gold for the purpose of transactions between central banks, only the dollar.
In 1944, the Bretton Woods established the International Monetary Fund, established a pattern of gold dollar, which until 1972 operated as a true currency almost universal. This is done prior to Mr. White, the U.S. delegation at Bretton Woods, when John Maynard Keynes, British delegate, advocate the idea of World Bank emission (which would have been the International Monetary Fund), and also a universal currency , which even made it a name: Bancor. Mr. White’s response was drastic: ‘Is To create a new world currency when we have the dollar and to a World Bank if there is the Federal Reserve System. But there were created the IMF and the The World Bank, the first to coordinate and control the SMI, and the second is to provide financing for development. Children’s Medical Fund Its objectives were to design an SMI could promote full employment and price stability of the country (internal and external balance) without hurting foreign trade.

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