International monetary systems are sets of internationally agreed rules, conventions and supporting institutions that facilitate international trade, cross border investment and generally the reallocation of capital between nation states.
They provide means of payment acceptable between buyers and sellers of different nationality, including deferred payment. To operate successfully, they need to inspire confidence, to provide sufficient liquidity for fluctuating levels of trade and to provide means by which global imbalances can be corrected.
The systems can grow organically as the collective result of numerous individual agreements between international economic actors spread over several decades.
From prehistory, precious metals such as gold and silver have been used for trade, termed bullion, and since early history the coins of various kingdoms and empires have been traded. The earliest known records of pre - coinage use of bullion for monetary exchange are from Mesopotamia and Egypt, dating from the third millennium BC.
Its believed that at this time money played a relatively minor role in the ordering of economic life for these regions, compared to barter and centralized redistribution - a process where the population surrendered their produce to ruling authorities who then redistributed it as they saw fit.
Coinage is believed to have first developed in China in the late 7th century, and independently at around the same time in Lydia, Asia minor, from where its use spread to nearby Greek cities and later to the rest of the world.
British and American policy makers began to plan the post war international monetary system in the early 1940s. The objective was to create an order that combined the benefits of an integrated and relatively liberalinternational system with the freedom for governments to pursue domestic policies aimed at promoting full employment and social wellbeing.
The principal architects of the new system, John Maynard Keynes and Harry Dexter White, created a plan which was endorsed by the 42 countries attending the 1944 Bretton Woods conference. The plan involved nations agreeing to a system of fixed but adjustable exchange rates where the currencies were pegged against the dollar, with the dollar itself convertible into gold.
So in effect this was gold – dollar exchange standard. There were a number of improvements on the old gold standard. Two international institutions, the International Monetary Fund (IMF) and the World Bank were created; A key part of their function was to replace private finance as more reliable source of lending for investment projects in developing states.
Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group. These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement.
The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.
They provide means of payment acceptable between buyers and sellers of different nationality, including deferred payment. To operate successfully, they need to inspire confidence, to provide sufficient liquidity for fluctuating levels of trade and to provide means by which global imbalances can be corrected.
The systems can grow organically as the collective result of numerous individual agreements between international economic actors spread over several decades.
From prehistory, precious metals such as gold and silver have been used for trade, termed bullion, and since early history the coins of various kingdoms and empires have been traded. The earliest known records of pre - coinage use of bullion for monetary exchange are from Mesopotamia and Egypt, dating from the third millennium BC.
Its believed that at this time money played a relatively minor role in the ordering of economic life for these regions, compared to barter and centralized redistribution - a process where the population surrendered their produce to ruling authorities who then redistributed it as they saw fit.
Coinage is believed to have first developed in China in the late 7th century, and independently at around the same time in Lydia, Asia minor, from where its use spread to nearby Greek cities and later to the rest of the world.
British and American policy makers began to plan the post war international monetary system in the early 1940s. The objective was to create an order that combined the benefits of an integrated and relatively liberalinternational system with the freedom for governments to pursue domestic policies aimed at promoting full employment and social wellbeing.
The principal architects of the new system, John Maynard Keynes and Harry Dexter White, created a plan which was endorsed by the 42 countries attending the 1944 Bretton Woods conference. The plan involved nations agreeing to a system of fixed but adjustable exchange rates where the currencies were pegged against the dollar, with the dollar itself convertible into gold.
So in effect this was gold – dollar exchange standard. There were a number of improvements on the old gold standard. Two international institutions, the International Monetary Fund (IMF) and the World Bank were created; A key part of their function was to replace private finance as more reliable source of lending for investment projects in developing states.
Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group. These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement.
The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.