5 The International Monetary System

An international monetary Many needed to print more money

system based on national to finance wartime spending. By
currencies emerged with the the end of the First World War,
supremacy of the UK economy in Britain was no longer the country
world trade in the eighteenth with the largest export surpluses:
century. Though international France and the USA had caught up.
trade and national currencies In 1925 Britain returned to the Gold
existed before the eighteenth Standard at the pre-war, and by
century, most settlements of trade 1925 over-valued, exchange rate.
were made through the transfer of This was followed by the General
gold bullion between countries. Strike in 1926 and a huge
The Gold Standard emerged speculative attack focused on the
gradually from this system of pound. The central bank in France
settlement by bullion. In 1821, started cashing in its export
Britain guaranteed the full surplus in pound sterling for gold
convertibility of its currency between 1926 and 1930. Soon the
against gold. America and France Bank of England ran out of gold
soon followed and guaranteed that reserves and could no longer
their currencies were fully maintain convertibility. […] The
convertible into gold. In theory the Bank of England had to confess it
Gold Standard rested on an did not have enough reserves of
automatic adjustment mechanism: gold. Britain left the Gold Standard
a country with a trade surplus in 1931 and international
would experience a net inflow of confidence in the currency
gold and so, expanded money suffered.
supply in the economy. Sooner or There were two broad
later, as the economy hit full effects of Britain leaving the Gold
capacity, the increase in aggregate Standard. Countries that had
spending due to this expanded pegged their currencies to the
money supply would result in a pound sterling, believing it was as
rise in prices. This would good as gold, had to come off the
effectively appreciate the currency, Gold Standard as well, causing
reducing price competitiveness and wide instability in their exchange
hence exports until the surplus was rates. This in turn caused large-
wiped out. In practice, however, scale financial failures and
gold was rarely exchanged. The bankruptcies as investors in
pound sterling was ‘as good as international markets saw their
gold’ and so the Gold Standard stocks depreciate in value
operated with the pound as a suddenly. A second effect came
centerpiece. This was like a fixed because some countries remained
exchange rate regime and imparted on the Gold Standard while many
stability to the international trading others had left. These countries
system. (e.g. France, Italy) had to impose
As countries went to war protectionist barriers to protect
between 1914 and 1918 many de- themselves against the
linked their currencies from gold. depreciating value of their rivals’
currencies. This is in turn sparked or revaluing it if it was too low. For
off a retaliatory tariff war between example, following a succession of
nations. substantial UK balance of
After the Second World payments deficits, the sterling was
War, a plan drawn up by Keynes devalued by 14 per cent in 1967
formed the basis of what was to be (from US$2.80 to US$2.40). The
a new international monetary Bretton Woods system was,
system. It was to be based on a therefore, an ‘adjustable peg’
system of fixed exchange rates with system, where one-off exchange
some mechanism for clearing rate adjustments were within the
international payments that would rules. Multilateral institutions such
be accepted by all nations. Bhaduri as the International Monetary Fund
(1986) points out that Keynes had were also set up to help member
suggested this clearing system be states over temporary balance of
based on an international currency payments deficits by allowing
called the ‘bancor’ which would be them to borrow the required
exchanged against gold. Deficit foreign exchange.
and surplus states had to agree to The relatively successful
accept these ‘bancor’ units in operation of the Bretton Woods
settlement whatever the actual system was attributable to the
value of their currencies. In imperfect mobility of international
practice, American influence capital movements, which made it
ensured the new monetary system easier for the authorities of a given
that emerged was based around country to peg their exchange rate
the US dollar. by means of official intervention in
For about half of the period the foreign exchange market. Such
after the Second World War the intervention was more likely to be
world economy has operated successful under foreign exchange
under a system of broadly fixed controls, since these controls
exchange rates known as the restricted the amount of
Bretton Woods system, so named speculative pressure which could
because it was established be generated against a currency.
following an international However, dollar reserves
monetary conference held in accumulated in European and
Bretton Woods, New Hampshire in American Banks located outside of
1944. Each country’s exchange rate the USA. By the mid-1960s they
was to be fixed (with 1 per cent freely created credit in the form of
either way of a central parity) to dollar denominated loans. Soon it
the US dollar, with the dollar being was clear that there was more
pegged to the price of gold at going around as dollar liabilities
US$35 per ounce. The system was than the US government could
not one of completely fixed support against its gold reserves. In
exchange rates. Individual 1950 for the USA, the ratio of total
countries could negotiate an international reserves (gold plus
exchange rate change if its balance foreign currencies) to dollar
of payments entered ‘fundamental’ liabilities held abroad stood at 2.7.
disequilibrium, devaluing the This ratio of the reserve backing of
currency if their rate was too high the dollar came down to 1.6 by
1956 and was less than 0.5 by 1967. rate regime for the world economy
In 1970 this figure had dropped to as a whole has emerged since the
less than 0.3. Investors became collapse of Bretton Woods.
aware of this poor backing of the Some important lessons can
dollar liabilities to gold. This be learnt from these two episodes
created a wave of speculative which revolved around fixed
attacks: first against currencies exchange rates based on a
pegged to the dollar, such as the dominant currency. Both the
pound which had to depreciate in pound and then the dollar emerged
1967. Massive conversions of dollar as the de facto international
reserves into other strong currency due to the supremacy of
currencies such as the their nations. While one dominant
Deutschemark and the yen also currency has conferred power and
followed. European countries prestige on the dominant nation
decided to un-peg their currencies and given stability to the
from the dollar and have a joint international economy in the short
float. Finally, the USA run, it has been difficult to sustain
acknowledged that the Bretton in the long run without the fixity of
Woods system was no longer the exchange rate breaking down
viable and came out of the system altogether with disruptive
altogether in 1970. consequences for the global
The breakdown of the economy. There are two principal
system in 1971 was followed by a reasons why the supremacy of one
general move to floating exchange national currency has been difficult
rates. Individual countries were no to sustain. First, as nationals of
longer committed to keeping their other countries started treating the
exchange rates fixed by means of dollar and pound reserves as base
official intervention in foreign money upon which to create more
exchange markets or by interest dollar denominated or pound
rate policy. This is not to say that denominated liabilities, the
since 1971 all exchange rates have international supply of dollars and
been freely floating. In the first pounds increased and the US
place, even though a given Federal Reserve and the bank of
exchange rate may appear to be England lost control over the
floating freely, it may not be a reserve to liabilities ratio for their
‘clean’ float. This means that, national currencies. This gave rise
although an exchange rate changes to speculative attacks. Second,
day to day, the authorities are whenever trade positions of the
nevertheless intervening in the leading currencies declined, some
market in order to smooth out long-term re-alignment of
these changes. While some exchange rates was inevitable and
countries opted for such a a fixed exchange rate system was
‘managed float’, others chose to fix bound to break down. Not
their exchange rates either with surprisingly then, the new
respect to one key currency, solutions that emerged after 1971
usually the dollar, or to a trade- have sought to impart some
weighted ‘basket’ of currencies. No flexibility on a fixed exchange rate
other widely accepted exchange system.
(slightly adapted from Economics
and Economic Change –
Macroeconomics)
5.1. THEORETICAL CONCEPTS EXPLAINED

 aggregate demand = the total of intended or ex ante attempts to spend on final

goods and services produced in a country. In a closed economy, aggregate
demand is the sum of consumption, investment and government
spending on goods and services. In an open economy, in addition to this,
it includes export demand and excludes imports. A rise in aggregate
demand is a necessary condition for an increase in real output. It is not a
sufficient condition, however, unless an economy has spare capacity to
produce the goods and services demanded. If the goods demanded are
available only as imports, these rise; if the extra goods are not available at
all, inflationary pressure is created. (cerere agregată)
 aggregate spending = total spending
 aggregate supply = the total amount of real goods and services that the
enterprises in an economy are willing to provide at any given ratio of
prices to wages. This can be increased by greater productivity due to
increases in the volume of productive equipment or improvements in
technical knowledge or the quality of the labour force. (oferta agregată)
 balance of payments = the total movement of goods, services and financial
transactions between one country and the rest of the world. In money
term, the balance of payments is the total of all receipts from abroad, and
of all payments to recipients abroad. All receipts and payments of
whatever nature are included, whether they be payments and receipts for
non-commercial purposes, such as legacies and for pensions; for goods
sold or services rendered; for investment purposes; on behalf of
government; or of private persons and agencies, of deficit position of
companies’ international trade transaction. (balanța de plăți)
 balance of trade = the excess of visible exports over visible imports. This is a
major, but far from the only, component of the balance of payments on
current account. (balanța comercială)
 basket of currencies = collection of currencies
 clearing = the offsetting of liabilities or purchases and sales between two parties.
 convertible = a) a currency is said to be convertible when it can be bought or sold
without restriction in exchange for other currencies; b) a security is
convertible when it carries the right for the holder to exchange it at a fixed
price for another form of security
 currency = a) notes and coins that are the current medium of exchange in a
country. A soft currency is one where the exchange rate is tending to fall
because demand for it is weak. A hard currency is one that is tending to
rise against other currencies; b) in US and UK banking, all foreign
currencies; c) In US, money supply terminology, currency refers to cash.
 economic growth = increase in the amount of the goods and services produced
by an economy over time. Economists distinguish between short-run
 economic changes in production and long-run economic growth. Short-
run variation in economic growth is termed the business cycle. The
business cycle is made up of booms and drops in production that occur
over a period of months or years. Generally, economists attribute the ups
and downs in the business cycle to fluctuations in aggregate demand.
(creștere economică)
 fixed exchange rate regime = a regime where foreign exchange rates are set and
maintained by government support, tied or linked to gold (the Gold
Standard) or to other currencies
 float = a) (US) a situation in which the cheque-clearing function of the Federal
Reserve may have a timing gap between the posting of matching credits
and debits to pairs of banks, thus artificially draining or bolstering those
banks’ reserves; b) floating rate; variable rate security; c) cash in hand at a
bank, or funds in course of transfer between banks.
 Gold standard = a system whereby a currency is linked to the value of gold. That
is, one would be able to exchange one unit of the currency for so many
ounces of gold on demand. The gold standard makes monetary policy
independent from policymaker decisions. Many currencies have been
linked to gold over the years, most recently under the Bretton Woods
System. The gold standard reduces the likelihood of inflation, but tends to
cause higher interest rates and renders a country less able to pursue full
employment. The gold standard contrasts with fiat money (see Chapter 7
What is money). (etalonul aur)
 net inflow = In the mutual fund industry, a situation in which more money is
flowing into a mutual fund than is flowing out of it.
 realignment of exchange rates = to readjust exchange rates between or within
countries, etc.
 settlement by bullion = Some central banks use bullion for settlement of
international debt, and some investors purchase bullion as a hedge against
inflation.
 settlement of trade = a securities trade is not complete – or settled –until the
security is delivered to the buyer and the cash has been delivered to the
seller. Although the transaction of the trade happens almost instantly in
electronic trading, the settlement process does not happen at the same
time as the trade.
 to de-link a currency = to make one currency independent, dissociate, separate
from another.

5.2. PRACTICE
5.2.1. READING COMPREHENSION
1. Answer the following questions:

1) Briefly present the system of settlement by bullion.

2) What did the Gold Standard consist of?
3) What were the consequences of applying the Gold Standard?
4) What were the consequences of the First World War on the Gold Standard?
5) Why was it that the Bank of England was no longer able to maintain convertibility
after 1926?
6) Describe the effects brought about by Britain’s leaving the Gold Standard and state
the reasons why it had to do that.
7) Briefly present the plan drawn up by Keynes after the Second World War.
8) What was the Bretton Woods system?
9) Why was the Bretton Woods system successful only for some time?
10) When did this system break down and what followed?
11) What were the consequences of the US Federal Reserve and the Bank of England
losing control over the reserve to liabilities ratio for their national currencies?

2. TRUE/FALSE: Decide whether the following statements are true or false:

1) In 1921, Britain guaranteed the full convertibility of its currency against gold.
TRUE  FALSE 
2) Theoretically, the Gold Standard rested on an automatic adjustment mechanism: a
country with a trade surplus would experience a net inflow of gold and so an expanded
money supply in the economy
TRUE  FALSE 
3) Between 1914 and 1918 many countries had to re-link their currencies to gold because
they needed to print more money to finance their war effort.
TRUE  FALSE 
4) In 1926 Britain returned to the Gold Standard at the pre-war, and by 1926 over-
valued, exchange rate.
TRUE  FALSE 
5) The central bank in France started cashing in its export surplus in pound sterling for
gold between 1926 and 1930.
TRUE  FALSE 
6) Countries that had pegged their currencies to the pound sterling, believing it was as
good as gold, had to come off the Gold Standard as well, causing wide instability in
their exchange rates.
TRUE  FALSE 
7) The plan drawn by Keynes was based on a system of fluctuating exchange rates with
some mechanism for clearing international payments that would be accepted by all
nations.
TRUE  FALSE 
8) After the Second World War, for about half the period, the world economy has
operated under a system of broadly fixed exchange rates known as the Bretton Woods
system
TRUE  FALSE 
9) Each country’s exchange rate was to be fixed (with 1 per cent either way of a central
parity) to the US dollar, with the dollar being pegged to the price of gold at US$37 per
ounce.
TRUE  FALSE 
10) Some countries opted for a ‘managed float’, while others chose to fix their exchange
rates either with respect to one key currency, usually the dollar, or to a trade-weighted
‘basket’ of currencies.
TRUE  FALSE 

3. MULTIPLE CHOICE. Choose the right word from the text to fill in the following
statements:

1) Most settlements of trade were made … the transfer of gold bullion between
countries.
a) off b) down c) to d) through
2) A country with a trade surplus would experience a net … of gold and so an
expanded money supply in the economy.
a) outflow b) inflow c) float d) flow
3) The pound sterling being “as good as gold” was like a fixed exchange rate … thus
imparting stability to the international trading system.
a) ratio b) interest c) regime d) system
4) The General … in 1926 was immediately followed by a huge speculative attack
focused on the pound.
a) stroke b) riot c) elections d) strike
5) In the end the Bank of England had to confess that it did not have enough … of gold.
a) resources b) reserves c) bullions d) amount
6) Countries that had pegged their currencies to the pound sterling had to come … the
Gold Standard causing wide instability in their exchange rates.
a) off b) out c) down d) in
7) Countries such as France or Italy had to impose protectionist barriers to protect
themselves against the … value of their rivals’ currencies.
a) appreciative b) appreciating c) depreciating d) soaring
8) Keynes had suggested a clearing system that should have been based on an
international currency which would have been exchanged … gold.
a) against b) for c) with d) off
9) Individual countries could negotiate an exchange rate change if its balance of
payments entered ‘fundamental’ …, devaluing the currency if their rate was too high or
revaluing it if it was too low.
a) balance b) equilibrium c) disequilibrium d) unbalance
10) While some countries opted for such a ‘managed float’, others chose to fix their
exchange rates either with respect to one key currency, usually the dollar, or to a trade-
weighted ‘…’ of currencies.
a) basket b) punnet c) pool d) basin
5.2.2. VOCABULARY STUDY
1. WORDS AND PHRASES OF FOREIGN ORIGIN. Fill in the blanks with the
correct word or phrase. Choose from the following:
ad hoc, ad infinitum, aplomb, bona fide, carte blanche, de facto, ex officio,
extracurricular, in camera, quid pro quo, rapport, non sequitur, per capita, prima facie,
status quo, tête-à-tête, vice-versa

1) What is the average …… income in your country?

2) The invitation to the annual party of the company says that wives are allowed to
bring their husbands and …… .
3) The general manager decided to set up an …… committee to deal with the urgent
problems that had come up.
4) Generally speaking, trade unions are not always against preserving the …… in a
factory. Yet, sometimes they demand change and reform.
5) As chairman he will be a(n) …… member of several important committees.
6) The tennis court is for …… members only. No one else is allowed to use it.
7) As there seems to be a …… case against that, they decided to press for an immediate
change in policy.
8) When the CEO and CFO met for the first time, there was an instant …… between
them.
9) Don’t mention recession when the members of the executive board are around;
otherwise they will go on …… about it.
10) The trade union representative handled the hostile questioning of the journalists
with great …… .
11) Your argument is a …… and totally irrelevant!
12) It was a very good solution to the current crisis ……, but in the end it proved to
be laden with traps.
13) The strategy involved discussing matters which were not supposed to be
revealed to ordinary shareholders, so it was held …… .
14) No one told him what to do. He was given …… to organize things as he saw fit.
15) The toy company offered their employees a twenty per cent discount for all
Christmas toys as a …… for having helped in achieving its annual revenue.
16) Our firm offers a wide range of …… activities for employees that wish to
strengthen their work relations.
17) I had a very interesting …… with the new manager last week. Now I think I
understand what he plans to do.

2. SYNONYMY. Find words in the text that would fit the following lines of
synonyms.

1) ascendancy, authority, control, dominance, predominance, superiority, ….

2) alteration, balancing, conformance, redress, standardization, fitting, …
3) accumulated, amassed, collected, cumulative, corporate, composite, …
4) rate of exchange, currency exchange rate, foreign exchange, …
5) applicable, feasible, operable, possible, usable, workable, …
6) excess, leftover, remaining, spare, superfluous, unused, …
7) available, determinable, extractable, inferable, obtainable, traceable, …
8) called, designated, dubbed, labelled, …
9) assumed, experimental, hypothetical, presumed, unsubstantiated,…
10) fractious, off-base, out-of-line, incompliant, unmanageable, …

3. PREPOSITIONS. Choose the appropriate preposition:

1) It’s only a possibility, but it could be that the company might emerge unharmed …
the recent stock exchange attack.
a) off b) from c) into d) through
2) The limited voting shares will be convertible … ordinary shares at the option of the
company at any time subject to certain conditions.
a) out of b) from c) into d) with
3) We rested … our laurels too long. Our competitors took away a lot of our business.
a) on b) beyond c) in d) for
4) A program that provides interest-free loans to Montana entrepreneurs will operate
this year … a new partnership between the Montana State University College of
Business and the Gianforte Family Foundation.
a) from b) after c) beside d) under
5) We can simply impart information … them or sell ' media products ' to them.
a) from b) against c) off d) to
6) When the stock price went up, we really cashed … .
a) off b) in c) down d) out
7) The collapse of the movement was attributable … a lack of morale.
a) under b) against c) to d) by
8) A carefully worded statement by the executive board representative that conferred an
aura of credibility … the event captured everyone’s attention.
a) to b) for c) on d) by
9) The management were no longer committed … the points previously agreed upon
during the last talks with the trade union.
a) to b) at c) in d) for
10) The speaker sparked … quite a discussion.
a) out b) off c) away d) up

4. PHRASES AND COLLOCATIONS. PAYMENT TERMS.

a) Read the definitions below and then complete the phrases that follow by
combining an appropriate word/phrase below with payment.
in kind; holiday; by results; order; gateway; repayable in easy; on account; date; deferred; balance
of … deficit; on invoice

1. money given which increases with the amount of

work done or goods produced payment ………
2. payment in goods or services that are similar to
goods or services that have been provided payment ………
3. a period when payments do not need to be made,
especially when repaying a debt or a mortgage payment ………
4. a negative balance of payments surplus (i.e. a
number summarizing the state of a country’s
international transactions, usually equal to the
balance on current account plus the balance on
financial account, but excluding official reserve
transactions, or omitting also other volatile short-term …… payment (s)
financial-account transactions) ……
5. an order to someone to make a payment payment ………
6. a debt which has been incurred and will be paid ……… payment(s)
back at some point in the future
7. software that processes online credit-card
payments. It gets authorization for the payment from
the credit-card company and transfers money into the
retailer’s bank account payment ………
8. paying part of the money owed payment ………
9. repayable with small sums regularly ……… payment(s)
10. 1. the date on which a bill is due. 2. the date on
which a dividend will be paid to stockholders or on
which interest will be paid to bondholders by the
issuers’ paying agents payment ………
11. paying money as soon as an invoice is received payment ………

b) Fill in with one of the phrases/collocations above containing the word payment.

1. If the ……… finally due are greater than the amounts paid, interest will be charged.
2. If you can’t afford the purchase and go with a ……… plan in the hopes that you’ll
scrounge up the money “somehow” by the time the payment is due, you may find
yourself saddled with an unwanted debt – and large interest payments to match.
3. The aim of ……… is to provide a transparent, rules-based system for paying trusts,
rewarding efficiency, supporting patient choice and diversity.
4. What happens if I miss a ……… ? If you don't pay a bill on time you'll get a late
payment charge of £7.50
5. In the 1950s, 60s and 70s, small ……… in the UK caused ‘economic crises’ with
periods of strong speculative selling of sterling on the foreign exchange markets and
much political instability.
6. Usually, ……… is made when the payee returns with the same kind of good or
service.
7. If you have selected credit card payment, debit card payment, online transfer,
payment in advance, ……… or payment on delivery as your payment method, the
goods will be sent when the order is received.
8. Once you’ve been paying off a credit card for a while, you might be offered a ……… .
9. Home loans are ………, like rent.
10. The beneficiary should be informed that the ……… is irrevocable.
11. ……… enables internet merchants to accept online payments via credit card and e-
check.

5.2.3. TRANSLATION PRACTICE

1. Translate the following texts into Romanian:

a) The head of foreign exchange and gold at the Bank for International Settlements
(BIS), estimates that central banks worldwide have lent no more than 4,700 tons of gold
to the market. The figure published in The Alchemist, the London Bullion Market
Association’s quarterly, is about one third of the amount estimated by GATA (the Gold
Anti-Trust Action Committee) based in Dallas, Texas. GATA says it has uncovered
evidence that the American government, assisted by others, has somehow “lent”
thousands of tones to speculators and bullion banks, notably Citibank and J.P. Morgan
Chase, to depress the gold price.
GATA’s website supports a court case filed in Boston by Reginald Howe, a gold
consultant, against Alan Greenspan, chairman of the US Federal Reserve, Mr. Summers,
the BIS and several big banks. Mr. Howe accuses them of conspiring to fix the gold
price. Few of the great and good appear to be taking the accusations seriously, hoping
perhaps that the case will be thrown out at a hearing next month.
For the record, Mr. Summers’ 1988 paper argued that if the nominal gold price
can be “pegged by the authorities”, other asset prices will rise. GATA argues that this is
precisely what Mr. Summers did while in office under President Clinton, buoying
American asset prices at the expense of poor gold-producing countries.
(abridged from Golf Fingered?, The Economist, September 15th, 2001)

b) To solve Argentina’s budget problems in the medium term, the economy must start
growing. And that, at least as seen in Washington, implies a new exchange-rate regime.
So why is no one saying as much to Mr. Cavallo, Argentina’s economy minister? The
IMF’s official position is that it cannot tell countries to default, and that exchange-rate
arrangements are a sovereign decision. “Countries choose their own exchange-rate
regime and we determine whether we support it,” says Tom Dawson, the IMF
spokesman.
The truth is that the IMF has often told smaller, weaker, countries exactly what to
do. But it is balking at trying to dictate a change in the exchange-rate regime to a big
emerging economy whose citizens are strongly in favour of the current system. In part,
this is a real change of philosophy: since, the arrival of Horst Köhler, the Fund’s
German boss, the IMF takes country “ownership” of economic reforms more seriously.
But partly, too, it is an attempt to avoid the blame for Argentina’s mess – “ass-
covering”, as it has been put by one Fund-watcher. Mr. Cavallo would quickly
denounce any pressure from the IMF either to default or to change the exchange-rate
regime, and would ensure that any subsequent economic chaos was squarely laid at the
Fund’s door.
Equally important, the technicians in Washington may agree that Argentina’s
current system cannot last – but not on what should replace it. Many IMF officials
reckon that a floating exchange rate would offer the country its best shot at growth
(though floating the peso, everyone admits, would be extremely risky and potentially
chaotic). But a few others in the Fund are said to favour dollarisation (after first
devaluing the peso). And certainly the Treasury’s Mr. Taylor is reported to lean
towards the notion that Argentina should simply adopt the greenback.
(The IMF and Argentina: Staying Mum, The Economist, December, 15th, 2001)

c) The IMF’s relationship with Argentina has been a fiasco, and because of this it is
facing one of the greatest challenges to its credibility in its history. Vacillation by
America towards Argentina has been a big factor. If the IMF does not command the
backing of its biggest shareholder. It will always be weak, hesitant and vulnerable to the
kind of brinkmanship that Argentina’s president has performed so skillfully. This has
been true since the IMF’s creation in 1945. Now more than ever, it needs a new chief
who can win back the Americans’ respect and, when necessary, even stand up to them.
(The IMF and Argentina: Whose Victory?, The Economist, March, 13th, 2004)

d) This week, Argentina challenged and fought, met the demands of honour – and
blinked in the face of the International Monetary Fund. Or was it the Fund that blinked?
It scarcely matters. After threatening to the last that it might not, on March 9 th the
Argentine government paid on time $3.1 billion in interest and principal it owed the
IMF, so averting the biggest default in the institution’s history. But Argentina gets
something in return: later this month the IMF will recommend to its board that the
country should be paid the money back again, part of the $13.5 billion facility agreed
last September. Relief all around.
(Argentina and the IMF: Knife-fights, The Economist, March, 13th, 2004)

2. Translate the following texts into English:

a) FMI este o organizaţie internaţională care are 184 de ţări membre, înfiinţată pentru a
promova cooperarea monetară internaţională, stabilitatea valutară şi acorduri valutare
sistematice, pentru a stimula creşterea economică şi niveluri înalte de folosire a forţei de
muncă şi pentru a acorda asistenţă financiară temporară ţărilor, în condiţii adecvate de
siguranţă pentru a ajuta la ajustarea balanţei de plăţi.
(www.fmi.ro)

b) Fondul Monetar Internaţional a cerut responsabililor din cadrul Uniunii Europene

contribuie la revigorarea pieţei muncii şi să încurajeze mărirea timpului de lucru în
zona euro, informează Financial Times.
În ultimul raport despre regiune, FMI a solicitat UE „să numească şi să
muştruluiască” guvernele care trag înapoi reformele, spunând că „provocarea cheie”
din zona euro implică creşterea economică pe termen lung bazată în primul rând pe
„întărirea stimulentelor pe piaţa muncii”.
Creşterea din zona euro a fost lipsită de vitalitate din cauza inflexibilităţii de pe
piaţa muncii, în special în Germania şi Franţa, primele două economii din regiune.
Fondul Monetar International (FMI) a ridicat estimarea pentru 2004 privind
creşterea economică în zona euro, însă a avertizat în acelaşi timp că există incertitudini
privind dezvoltarea pe termen lung.
(Fondul Monetar International critică UE, dar estimează creştere în zona euro, Ziarul
financiar)

c) România trebuie să-şi rezolve problemele legate de dezechilibrele macroeconomice,

recomandă raportul Comisiei Europene, braţul executiv al Uniunii Europene, concluzie
preluată din discursul Fondului Monetar Internaţional (FMI). Deşi politica fiscală este
un atribut naţional şi nu unul comunitar, Comisia Europeană a ţinut să recomande
României, la sugestia FMI, o politica economică prudentă care să asigure stabilitate
macroeconomică. De altfel, în repetate rânduri, oficialii români au susţinut că acordul
cu FMI nu ar mai fi necesar, însă că el este solicitat de Uniunea Europeană, care nu are
capacitatea de expertiză macroeconomică necesară monitorizării României. România
are un răgaz de şase luni pentru a-şi pune la punct problemele asupra cărora a pus
degetul raportul, inclusiv chestiunea corupţiei şi a siguranţei alimentare. În cazul în
care nu-şi rezolvă setul de probleme identificate de raport, aderarea României va fi
amânată cu un an. Perspectivele aderării au triplat investiţiile străine directe în 2004,
când suma acestora a atins 7 miliarde euro, potrivit datelor analizate de raport.
(Fondul Monetar Internaţional a scris capitolul macroeconomie al Raportului Averea, 26
Octombrie 2005)

d) La Bucureşti optimismul e la el acasă, cel puţin la Palatul Victoria. Ministrul

Finanţelor, Sebastian Vlădescu, a dat vinerea trecută asigurări, după o scurtă întâlnire
cu reprezentanţii misiunii FMI în România, că taxa pe valoarea adăugată (TVA) nu va fi
majorată, fiind purtate în prezent discuţii despre lărgirea bazei de impozitare. […]
Proiecţia de creştere economică de 0,8% rămâne valabilă, ministrul de finanţe negând
informaţia dată iniţial de reprezentanţii patronatelor, potrivit cărora FMI ia în calcul o
creştere economică negativă.
De fapt, creşterea economică estemarea problemă a guvernului. Acesta încă
raportează deficitele în sumă nominală la PIB-uri umflate. Deficitul pe 2009 este
raportat în continuare la un PIB de 505 miliarde de lei., deşi atât Institutul Naţional de
Statistică (INS), cât şi FMI afirmă că acesta a fost de 491 miliarde de lei. De asemenea,
săptămâna trecută, Guvernul a raportat triumfalist că bugetul general consolidat a
înregistrat în primul trimestru un deficit de 8,22 miliarde de lei, respectiv 1,53% din PIB,
sub ţinta stabilită cu FMI de 8,25 miliarde de lei.
(Cât va mai tolera FMI un TVA de 19%? Săptămâna Financiară, 3 Mai 2010)