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    The International Monetary System: by Jeffrey Wong

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    Rizza Regalado
    The document discusses the international monetary system from 1944 to the present. It covers: 1) The Bretton Woods system established in 1944 that pegged currencies to gold at $35 an ounce and created the IMF and World Bank. 2) The breakdown of the Bretton Woods system in the early 1970s due to economic crises and the U.S. abandoning the gold standard. 3) The transition to a system of floating exchange rates after 1973 and the effects of globalization and oil shocks on world economies and inflation.

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    The International Monetary System: by Jeffrey Wong

    Uploaded by

    Rizza Regalado
    23 views7 pages
    The document discusses the international monetary system from 1944 to the present. It covers: 1) The Bretton Woods system established in 1944 that pegged currencies to gold at $35 an ounce and created the IMF and World Bank. 2) The breakdown of the Bretton Woods system in the early 1970s due to economic crises and the U.S. abandoning the gold standard. 3) The transition to a system of floating exchange rates after 1973 and the effects of globalization and oil shocks on world economies and inflation.

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    The document discusses the international monetary system from 1944 to the present. It covers: 1) The Bretton Woods system established in 1944 that pegged currencies to gold at $35 an ounce and created the IMF and World Bank. 2) The breakdown of the Bretton Woods system in the early 1970s due to economic crises and the U.S. abandoning the gold standard. 3) The transition to a system of floating exchange rates after 1973 and the effects of globalization and oil shocks on world economies and inflation.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    23 views7 pages

    The International Monetary System: by Jeffrey Wong

    Uploaded by

    Rizza Regalado
    The document discusses the international monetary system from 1944 to the present. It covers: 1) The Bretton Woods system established in 1944 that pegged currencies to gold at $35 an ounce and created the IMF and World Bank. 2) The breakdown of the Bretton Woods system in the early 1970s due to economic crises and the U.S. abandoning the gold standard. 3) The transition to a system of floating exchange rates after 1973 and the effects of globalization and oil shocks on world economies and inflation.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 7

    The International Monetary

    System

    By
    Jeffrey Wong
    • What was the gold-exchange standard in
    1944 to 1973 and why is it important?
    • How globalization and world politics
    effected our economy?
    “Timeline”
    1945
    1960
    The International Bank
    Speculative
    for Reconstruction and
    Capital Flows
    Development was
    and Crises
    established. Also know as
    the World Bank

    July 1944
    The representatives of International
    44 countries met at Early 1970’s
    Monetary Fund
    Bretton Woods, New Economic crises were
    (IMF) was form
    Hampshire. Agreed to massive,
    renew the gold- The Bretton Woods
    exchange standard. structure of fixed
    US Dollar was
    Bretton Woods system exchange rates was
    pegged to gold
    was born. brought down
    at$35 an ounce
    “Timeline”
    Bretton Woods High inflation and some
    August 15, 1971, System ended Stagflation worldwide
    President Richard M.
    Nixon announced that From $3 to
    the United States $12 per barrel
    would no longer
    redeem gold at $35 per 1973-1975
    ounce First Oil Shock

    Worldwide inflation Second Oil Shock


    and the transition to 1979 -1980
    Floating rates

    From $13 to
    US speeds up it Inflation abroad as foreign
    $32 per barrel
    monetary growth central banks purchase the
    under the Floating reserve currency to maintain
    exchange rate their exchange rates and expand
    system their money supplies in the
    process
    Purchasing Power Parity Model

    1
    E 1

    2 Domestic-currency
    E 2
    Return on foreign-
    Foreign
    Exchange Currency deposits
    market
    Domestic interest
    0 1 2 rate, R
    R R L(R,Y1)
    Money demand curves

    Ms L(R,Y2)
    P US Real
    1 2 Money supply
    US money Output rises
    market

    Real domestic
    Money holdings
    Has the world Income Gap Narrowed over Time?

    • Growth doesn’t happen Y=E(P*Q)


    • world over production
    • real estate e-financials speculation
    • corrupt banks
    • government waste
    • profit movement overseas
    The Policy Trilemma for Open Economies
    Exchange
    rate stability
    The vertices of the
    triangle show three Unfortunately,
    goals that policymakers at most two can coexist
    in open economics
    would like to achieve

    Monetary Freedom of
    Floating exchange rate
    Policy autonomy Capital movement

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