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IntlFinancialSystems - Institute a rule of law open economy...

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INR 11-28-07 International Financial Systems Pre-WWI: The Gold Standard Currencies tied to gold Fixed exchange rates The money supply can only expand as fast as the states holdings of gold 1945-1971: The Bretton Woods System US $ tied to gold at $35/ounce US $ is key reserve currency All other currencies fixed to the US $ Official rates of exchange between currencies set by governments 1973-Present: The “Non” System Multiple reserve currencies: US $, yen, euro Floating exchange rates (market determines the rate) International Monetary Fund Goals: help members maintain stability in their exchange rates and equilibrium in their balance of payments Fixed exchange rates US dollar as key reserve currency Recently: lender of last resort to debt-ridden 3 rd world countries IMF conditionality- conditions on these loans
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Unformatted text preview: Institute a rule of law, open economy, rid corruption, focus on exports, get rid of subsidies, etc. European Director- leader Headquartered in Washington, DC IMF: Weighted Voting Based on the amount of one’s contribution US 17% Has most votes Japan 6% Germany 6% France 5% UK 5% *pretty much run by the G7- the world’s 7 richest countries* World Bank Focus went from reconstruction to development Main provider of multilateral loans and grants to the 3 rd world American Head- leader Headquartered in Washington, DC ** Both IMF and World Bank based on weighted voting**-The countries who make the largest financial contributions get the most votes-Controlled by the G-7 (US, Japan, Italy, Germany, France, UK, Canada)...
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