The International Monetary System History and Where 国际货币体系的历史和地方.pptVIP

The International Monetary System: History and Where we are Today Recall the Definition of an Exchange Rate Regime Defined: The way in which a country manages its currency and thus the arrangement by the price of that country’s currency is determined on foreign exchange markets. Arrangements ranging from: Floating Rate Managed Rate (AKA “Dirty Float”) Pegged Rate Arrangement is determining by governments. History of Exchange Rate Regimes Over the past 200+ years, the world has gone though major changes its global exchange rate environment. Starting with the gold standard regime of the latter part of the 19th century to today’s somewhat “mixed system” we can identify there 3 distinct periods: Gold Standard: 1816 - 1914 Bretton Woods: 1945 - 1973 Mixed System: 1973 – the present Gold Standard: 1816 - 1914 During the 1800s the industrial revolution brought about a vast increase in the production of goods and widened the basis of world trade. At that time, trading countries believed that a necessary condition to facilitate world trade was a stable exchange rate system. Stable exchange rates were seen as necessary for encouraging and settling commercial transactions across borders (both by companies and by governments). So by the second half of the 19th century, most countries had adopted the gold standard exchange rate regime. Basics of the Gold Standard The gold standard regime required that domestic currencies (national money) be defined in terms of a specific weight of gold. For example: The British pound was fixed at .23546% of an ounce of pure gold (in 1816). The U.S. dollar was fixed at 0.048379% of an ounce of pure gold (in 1879). Thus, the dollar pound “parity” (i.e., the exchange rate) was set at $4.867 .23546/.048379 = 4.867 The Gold Standard also required that each country adjust its domestic money supply in direct relation to the amount of gold it held. Increase in gold would increase the domestic money and a reduction in its gold supply would red