Chapter 1 Evolution of the International Monetary System 国际金融专业双语教学文稿.pptVIP

* Chapter 1: Evolution of the International Monetary System History of the international monetary system International gold standard (1880-1914) Characteristics: In the case of a gold standard, Currencies are valued in gold, and all currencies that are pegged to gold are therefore automatically linked to each other, The price is maintained because the government stands ready to buy and sell gold to all customers at the pegged value. International Gold Standard Price-Specie-Flow Mechanism (David Hume) Premises: I. There’s no restraint on the buying and selling of gold within countries, and gold moves freely between countries. II.The money supply is allow to change in response to the change in gold holding in a country. III.Prices and wages are assumed to be flexible upward and downward. outflow of reduction price’s Import gold of Ms fall Export BOP BOP deficit surplus Import price’s Increase inflow of Export rise of Ms gold MV=PQ Limitations of the gold standard The automatic adjustment mechanism needs the governments abide by “the rules of game”. Flexibility in wages and prices is obviously required for this mechanism to work. The mechanism has the material basis that global gold outputs could meet economy development’s need. History of the International Monetary System The Bretton Woods System As World War II was drawing to a close, the historic united nations monetary and financial conference was held in Bretton Woods, New Hampshire in 1944. Then the new international monetary system-- The Bretton Woods System was built. History of the International Monetary System Content The dollar was defined by US as having a value of 1/35 of