sistema monetario internacional Flashcards
(28 cards)
What are the stages of the international monetary system in alphabetical order?
Bimetallism, Bretton Woods system, Classical gold standard, Flexible exchange rate regime, Interwar period
What is the chronological order of the stages of the international monetary system?
Bimetallism, Classical gold standard, Interwar period, Bretton Woods system, Flexible exchange rate regime
What is a characteristic of the bimetallism monetary system?
It is unstable due to fluctuations in the commercial value of metals.
What does Gresham’s Law state?
The metal with a higher commercial value tends to be used as metal and withdrawn from circulation as money.
How would you take advantage of an exchange rate situation with gold pegged to pounds and dollars?
Buy 10 ounces of gold with dollars at $35 per ounce. Convert the gold to £200 at £20 per ounce. Exchange the £200 for dollars at the current rate of $1.80 per pound to get $360.
What happens when new silver mines flood the market under a bimetallic standard?
Only the gold currency will circulate.
What was the exchange rate between the U.S. dollar and German mark under the classical standard?
1 German mark = $0.50
What is a potential drawback of the gold standard?
The world economy can be subject to deflationary pressure due to the limited supply of monetary gold.
What defines an ‘international’ gold standard?
Gold alone is assured of unrestricted coinage, there is two-way convertibility between gold and national currencies at stable ratios, and gold may be freely exported or imported.
What happens under a gold standard if Britain exports more to France?
International imbalances of payment will be corrected automatically.
What should an ounce of gold be worth in U.S. dollars if the pound is pegged to gold at six pounds per ounce?
$30.00
What characterized the period of the classical gold standard from 1875-1914?
Highly stable exchange rates
What is required for banknotes under the gold standard?
Banknotes need to be backed by a gold reserve of some minimum stated ratio.
How are international imbalances of payment corrected under the gold standard?
Through the price-specie-flow mechanism.
What emerged as the dominant world currency between World War I and World War II?
The U.S. dollar gradually replaced the British pound.
What happened at the outbreak of World War I regarding banknotes?
Major countries suspended redemption of banknotes in gold and imposed embargoes on the export of gold.
What were the key features of the Bretton Woods system?
An explicit set of rules for international monetary policies, countries maintaining exchange rates within 1 percent of par value, and the U.S. dollar being fully convertible to gold.
What was the responsibility of each country under the Bretton Woods system?
To maintain its exchange rate within ±1 percent of the adopted par value by buying or selling foreign exchanges as necessary.
What was the status of the U.S. dollar under the Bretton Woods system?
The U.S. dollar was the only currency fully convertible to gold; other currencies were not.
What became clear in the years leading to the collapse of the Bretton Woods system?
The dollar was overvalued.
What was established under the Bretton Woods system regarding currency values?
Each country established a par value for its currency in relation to the dollar.
When was gold officially abandoned as an international reserve asset?
In the January 1976 Jamaica Agreement.
What determines exchange rates under a purely flexible exchange rate system?
Supply and demand.
What are the benefits of adopting a common European currency?
Reduced transaction costs, elimination of exchange rate risk, and increased price transparency promoting competition.
