Evolution of International Monetary System Essay

Evolution of International Monetary System - judge ExampleMoreover, there was no mechanism to consolidate an orderly return to inflation- dressed reciprocation rates. When countries, such as the United Kingdom in 1925, tried to return to the gold standard at overvalued parities, they were forced to keep going painful deflation of wages and prices in order to restore competitiveness (Check against Delivery, 2009). During the Great Depression, the united states stay with exact norms of the gold-exchange standard, but gradually could not use monetary policy to offset the economic contraction (Eichengreen & Franklin, 1992). Bretton woodwind instrument In the 1940s, British and American policy doctorrs decided to work jointly to design a unexampled post war international monetary system, which would combine the benefits of a liberal international system along with the freedom for government to pursue domestic policies aimed at promoting social salubrious being and employment to al l. The champion 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 woodwind instrument conference. The plan involved nations agreeing to a system of fixed but adjustable exchange rates where the currencies were pegged against the long horse, with the dollar itself convertible into gold. So in effect this was gold dollar exchange standard (International Monetary Systems, 2010). The principal(prenominal) feature of Bretton Woodss system was Simplicity and adjustability to the rates as well as the exchange rates was a real reflection of the instability of inter-war period. It was more administered than market-based also exchange rates try-on was... This essay presents a comprehensive review of the stages of the development of the international monetary systems. Possible reform measures to make the monetary system more fair and stable argon discussed in the paper.International m onetary systems are sets of internationally agreed rules, conventions and supporting institutions that facilitate international trade, cross boarder investment and basically the reapportionment of capital between different nations. Over the past century, different international monetary regimes have struggled to adjust to structural changes, including the integration of emerging economies into the global economy. Systemic countries failed to adapt domestic policies in a look consistent with the monetary system of the day. Adjustment was delayed, vulnerabilities grew, and the reckoning was disruptive for all.All the developing as well as the developed economies, should accept their responsibilities for open, strong and effective management of International Monetary System. Main purpose would be the timely recognition of any negative effects regarding a particular monetary termination on global economies and financial systems, as well as working to mitigate those before it amplifi es untoward dynamics. So countries adopting a new policy should make sure that they submit it for peer review internally and then have the IMF do an external review Globalized economy with market-based exchange rates and effective use of goods and services of reserves will lead to proper and harmonious external balance over time.