Question

Trace the evolution of the international monetary system up to its current status and offer a judgment as to its future.

(PLEASE ANSWER THOROUGHLY AND IN DEPTH)

Answer 1

Evolution of International Monetary system Explanations An international monetary system refers to the set of internationally agreed rules, that facilitate international trade, cross border investment etc. Inother words international monetary system facilitate international economic exchange because most countries have national Currencies that are not typically accepted as legal payment beyound their borders. The evolution of International Monetary system traced out from the following stages Gold standard [1875-1914] Inter- Was period [1915-1944] Bretton Woods system [1945-1972] Current International Monetary system.

o each interms Gold standard system Under gold standard system country fixed the value of its currency of gold, in to The gold standard created a fixed exchange rate system and there was free convertibility between gold and national currencies. Also, all national Currencies had to be backed by gold. Therefore, the countries had to keep enough gold reserves to isque currency. Under this system, exchange rates between countries are fixed, if exchange rates rişe above or fall below the fixed mint rate by more than the cost of shipping gold from One country to another, large gold inflows of outflows occur until the rates return to the official level. These "trigger" prices are known as gold points o Inter War period After the world was started in 1914, the gold standard was collapped. United states economic growth in the 1920's until 1928, but then almost completely halted as the uş economy began sols slowing this year. As the Great Depression intensified in 1930, financial institutions were hit hard along with trade.

•Bretton wood system In the early 1940lf, the United states and United Kingdom began to rebuild the world economy after the destruction of the two world Warls. Their goal was to create a fixed exchange rate system without the gold standard, and the new international monetary system was established in 1944 in a conference organised by ♡ UN in a town named Bretton Wood in New Hamspire [USA]. The conference is officially known as the United Nations Monetary Monetary and financial conference. This conference also led to the creation of the IMF, World Bank, GATT, Prese Current International Monetary system Bretton Woodę syątem collapsed in 1971, the us had to stop convertibility to gold due to high inflation and trade deficit in the economy. Inflation led to an increase in the price of gold and in 1972, the world moved to à flexible exchange rate system. In 1976, the countries met in Jamaica to formalize the new system. The floating exchange rate system means that exchange rate of a currency is determined by the market forces of demand and supply.