International monetary system
Executive summary
World trade relies on the typical exchange of currencies between and among nations. The article provides insights into how global businesses depend on foreseeable and steady mechanisms. The report takes into account the recent history of the world monetary systems and the mode in which it has evolved and transform over the past twenty decades. As the existing financial system show a growing trend, numerous lessons have been learned over the last five decade to assist in ascertaining the prolific anticipated alternatives. The article considers the post-World War II monetary landscape, which has enhanced the development of the two institutions that have drastically played a vital role in the broader global economy.
Essentially, the article provides a comprehensive understanding of the role of the international monetary system and the World Bank to the global economy. Additionally, it offers substantial ideas about the manner many governments in underdeveloped nations consider specific options as opposed to others. Indeed, it gives insights as to why governments or societies fund specific projects and collaborate with the private sector in executing such initiatives. All reasons why many economies across the globe need money are among what the article comprehensively underscores. Money has been emphasized in the report as the sole medium of exchange used by many economies. The article provides information about how the existing monetary system has been fully implemented and the history of the evolution of the policies and money. For instance, it narrates the concept of barter trade that was conventionally adopted by many people and businesses. Barter system worked efficiently for people who wanted complementary commodities and is still used by other parties in the contemporary setting. History documents that Mesopotamia and Egypt which constitute the land that is located between rivers Tigris and Euphrates, which is present-day refereed to Iraq, started to use the monetary system and dwelled on the silver and gold that is commonly known as bullion. While barter was the most predominant method used, the gold and silver content led to the adoption of the gold value and substance. This lasted many more years as a measure of the economy. Hence, the monetary system has evolved through many centuries from the typical gold and silver content, which embodies the country’s wealth as well as the economic exchange of the present system.
Correlation to Class/ Textbook
The international monetary system is a relevant topic in class and entails a system that establishes rules and principles for expediting global trade between and among nations. As provided in the article, the concept of an international monetary policy assists in changing the capital as well as investment from one country to another. The idea is pertinent to the course in class as it provides for the global network of the government among other financial institutions that decide for the exchange rate of various currencies for global business. The concept offers a house of principles and rules in which many other countries trade in currencies. Through the expanding intricacy in international trade as well as the financial market environment, the concept of the global monetary system has played a vital role in determining the average value of the universal exchanges. The rules and principles established by the international financial system to control the exchange value of the currencies are settled upon by the government actors of the nations. Therefore, any government decision may primarily affect the course of the international monetary system. In particular, any alteration in the trade policy of a rule may influence the trade of services and commodities. The concept is relevant to the class since it states how the international monetary system bolsters the states to engage in international business to enhance the balance of payments and also reduce the trade deficit, among other restrictions. It provides the need to integrate the global economy. The concept is relevant as it shows who the World Bank, as well as international monetary fund, was established and developed in 1944. As such, the creation of the global monetary fund and the World Bank is a consequence of the treaty among states with a prominent role of promoting and aiding international trade. The article, by providing the history and evolution of the global monetary system, has helped us understand the mechanisms of expenditure and inflation and how great depression has significantly affected the international financial system.
Opinion
Based on my analysis, the international monetary system entails an operating system of the financial landscape that encompasses the financial institutions, investors, and multinational corporations. Also, the global monetary policy documents the procedures for international payments, circulation of capital, and a way of determining exchange rates, among others. In the session I have had in class, I have garnered insightful ideas about the international monetary system that is relevant to governments’ policymakers. It consolidates internationalization of currencies, minimization of global imbalances, and strengthening of the global financial safety net. From the information I have, I can opine that the international monetary system is an effective-functioning monetary public good that is essential for economic as well as financial stability. It is evident ho global monetary policy has aided in supporting and enhancing exceptional financial growth as well as trade expansion in the present times.
Conclusion
From the article, I have learned numerous ideas about the international monetary system. In particular, I have known that the global economy is developing more swiftly, and the international financial system should be flexible enough to integrate and fit the changes. From the idea of internationalization of currencies, I have realized the importance of the global monetary system. Systemic perspectives provide a significant use of numerous coins that can multiply perils and allow the gradual modifications and provision of inducements for maintainable policies. Besides, it helps to establish a more stable situation for the income flow hence allowing for systemic profoundness. Essentially, it helps to minimize the tensions that exist between domestic policies in reserve-supplying nations as well as the liquidness prerequisites of the worldwide economy. At the national level, the importance of the international monetary system entails the potentiality to dispense a foreign debt on a competitive basis. As such, when efficiently used, it can lead to sustainable growth and development within a nation. Also, favorable policies are established that favors trade within the country. Emergency capital can be made available through the system hence changing and expanding the economy more greatly. Lastly, the effectiveness and success of the international monetary policy have been to increase and protect nations from the devastating effects of the 2008 worldwide financial crisis as well as the economic downturn.