Handouts

international financial institution
World economies have been brought closer together by globalization l. It. Is

reflected in the. Phrase " when the American economy sneeze, the rest of the
world catches a cold." But it is important to remember 5hat it is not only the
economy of the united states but also other economies in the world that have
a significant impact of the global market and finance, for instance m, the.
Financial crises experience by Russia and asia affected the worl economy. The.
Strength of a more powerful economy brings greater effect on other
countries. In the same manner m, crises on weaker economies have less
affect on other countries. For example, Argentina's serious financial crisis in
the late 1990s and Early 2000s had a comparatively Small impact on the
global economy.
International Monetary Fund. (2023). About the IMF.

https://www.imf.org/en/About
• The Bretton Woods System
• The major economies in the world had suffered because of World War I, the Great
Depression in the 1930s, and World War II. Because of the fear of the recurrence of lack of
cooperation among nation-states, political instability, and economic turmoil (especially
after the Second World War), reduction of barriers to trade and free flow of money among
nations became the focus to restructure the world economy and ensure global financial
stability (Ritzer, 2015). These consist the background for the establishment of the Bretton
Woods system.
• In general, the Bretton Woods system has five key elements. First element is the
expression of currency in terms of gold or gold value to establish a par value (Boughton,
2007). For instance, a 35 U.S. dollar pegged by the United States per ounce of gold is the
same as 175 Nicaraguan cordobas per ounce of gold. The exchange rate therefore would
be 5 cordobas for 1 dollar. Another element is that "the official monetary authority in each
country (a central bank or its equivalent) would agree to exchange its own currency for
those of other countries at the established exchange rates, plus or minus a one-percent
margin" (Boughton, 2007, pp. 106-107). The third element of the Bretton Woods system is
the establishment of an overseer for these exchange rates; thus, the International
Monetary Fund (IMF) was founded. Eliminating restrictions on the currencies of member
states in the international trade is the fourth key element
• Ritzer, G. (2015). The Bretton Woods System. In Encyclopedia of Globalization (Vol. 1, pp.
1-3). Wiley-Blackwell
• occurs when prices among differentlocations or related goods follow similar patternsover a
long period of time. Groups of pricesoften move proportionally to each other andwhen this
relation is very clear among differentmarkets it is said that the markets areintegrated.Market
integration provides a number of social benefits, including broadening the rangeof financial
services and investment opportunities available to consumers and increasingcompetition in the
provision of those services. In addition, integrated financial markets actas private risk-sharing
mechanisms that facilitate the smoothing of both economic andfinancial cycles in domestic
economies. Moreover, market integration enables greater riskdiversification, thereby
contributing to more effective risk management and to financialstability.
• Economy and Economic Systems
• Economy
• is composed of people. it is a social institution that organizes all production,consumption, and
trade of goods in the society.
• Economic system
• is an organized way in which a state or nation allocates its resourcesand apportions goods and
services.
• TYPES OF ECONOMIC SYSTEM
• 1.
• CAPITALISM
• Capitalism is an economic system. In it the government plays a secondary role. Peopleand
companies make most of the decisions, and own most of the property. ... The meansof
production are largely or entirely privately owned (by individuals or companies) andoperated
for profit. An economic and political system in which a country's trade and industry
are controlledby private owners for profit, rather than by the state

Handouts

Uploaded by

Copyright:

Available Formats

Handouts

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Handouts

Uploaded by

Copyright:

Available Formats

international financial institution

World economies have been brought closer together by globalization l. It. Is

International Monetary Fund. (2023). About the IMF.

You might also like