12190_mert_gokcu_MERT_GÖKCÜ_42167_537597273.docx - FIRST...

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FIRST ASSIGNMENT Firstly, I would like to define trilemma and dilemma. Trilemma means that free capital mobility, independent monetary policy and fixed exchange rate system cannot be implemented simultaneously. Two of them can be carried out together. On the other hand, dilemma means that central banks cannot perform independent monetary policy whatever exchange rate system is since capital mobility and financial mobility has reached very large scales in the recent years. The reason behind is that capital mobility power on the credit circles and exchange rates are increasing day by day. Secondly, I would like to mention developing of the monetary policy in the world. In 1880-1914 years, gold standard was international monetary system. The Britain was the major leader of this system. After World War 1, gold standard system was collapsed. Instead of gold standard system, gold-exchange system was used in the 1920s. Main advantage on the gold standard system is that countries needed to less gold reserves. After this, Bretton Woods Treaty was signed in 1 July 1944. That 35 US Dollars equals to 1 onus gold was accepted by countries.
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