management 企业管理类英文版课件 4.pptVIP

When Governments Fix Exchange Rates Capital account balance Purchases sales Financial assets to from Citizens companies of other countries Balance of payments Current account Capital account * Gold Standard Bretton Woods System Gold standard - Fix exchange rates Define each participating currency In terms of gold Allow holders of each participating currency To convert that currency into gold Fixed exchange rates Monetary policy Dedicated to pegging exchange rate Cannot be used - manage aggregate demand * Gold Standard Bretton Woods System Breton Woods agreement Fixed exchange rates Based on free convertibility U.S. dollar – gold Achievements Re-fix exchange rates Restore world trade Flaws Chronic deficit – balance of payments Overvalued dollar * Adjustment under Fixed Exchange Rates Fixed exchange rates - Government Loses some control over domestic economy Forced to contract economy Balance of payments considerations When economy needs expansion Forced to expand economy Balance of payments considerations When economy needs to be reined in * Why Try to Fix Exchange Rates? International currency speculators Buy currency - value is low Help support it - push up demand curve Sell currency – value is high Hold down price – increase supply curve Help limit price fluctuations * The Current “Nonsystem” International financial system today Blend: fixed floating exchange rates “Nonsystem” Some currencies Pegged - Bretton Woods Some countries - U.S. dollar Other countries – tie currencies “Basket” of several currencies More nations - floating exchange rates Some government intervention * The Current “Nonsystem” International Monetary Fund (IMF) Provides loans – with strings attached Floating exchange rates Volatile European Union (EU) Euro – single currency January 1990: $1.80 October 2000: $0.83 January 2008: $1.47 * The ups and downs of the dollar Figure 7 * APPENDIX APPENDIX Chapter 35 The International Monetary System: Order or Disorder? Cecily, you will read your