Chap029

Chap029 - Chapter 29 The International Monetary System:...

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Chapter 29 – The International Monetary System: Past, Present, and Future CHAPTER 29 THE INTERNATIONAL MONETARY SYSTEM: Past, Present, and Future Learning Objectives: To become familiar with the key characteristics of an effective international monetary system. To appreciate the historical evolution of the international monetary system from Bretton Woods to the present time. To grasp the purpose of the IMF and understand its strengths and weaknesses. To gain familiarity with existing alternative monetary arrangements. To become aware of several proposals for reform of the current international monetary system. 29-1
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Chapter 29 – The International Monetary System: Past, Present, and Future I. Outline Introduction - The IMF Seeks Stability The Bretton Woods System - The Goals of the IMF - The Bretton Woods System in Retrospect Gradual Evolution of a New International Monetary System - Early Disruptions - Special Drawing Rights (SDRs) - The Breaking of the Gold-Dollar Link and the Smithsonian Agreement - The Jamaica Accords - The European Monetary System - Exchange Rate Variations - Short-Run Fluctuations in the 1990s Current Exchange Rate Arrangements Experience under the Current International Monetary System - The Asian Crisis: The Miracle Unravels Suggestions for Reform of the International Monetary System - A Return to the Gold Standard - A World Central Bank - The Target Zone Proposal - Controls on Capital Flows - Greater Stability and Coordination of Macroeconomic Policies across Countries The International Monetary System and the Developing Countries Summary II. Special Chapter Features In the Real World: Flexible Exchange Rates in Post-World War I Europe: The United Kingdom, France, and Norway In the Real World: Adopting the Euro in the New Member States Concept Box 1: A World Central Bank within a Three-Currency Monetary Union 29-2
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Chapter 29 – The International Monetary System: Past, Present, and Future III. Purpose of Chapter The purpose of this chapter is to acquaint students with the desirable features of an effective international monetary system, to review the characteristics and problems of the Bretton Woods system, and to discuss current international monetary arrangements and difficulties (including the Asian Crisis). Some suggested reforms of the current international monetary system are also considered, and brief consideration is also given to views held by developing countries regarding the international monetary system. IV. Teaching Tips A. Students often fail to appreciate the importance of a smoothly-functioning international monetary system. The devastating trade experience of the 1930s, when chaos reigned in international finance, serves as a reminder of this importance. You should stress to the students that the gains from trade discussed in the first part of the textbook are importantly dependent upon a stable monetary system such as is sought by the IMF, other institutions, and government leaders. B.
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This note was uploaded on 11/27/2009 for the course ECON 421 taught by Professor Macphee,c during the Spring '08 term at UNL.

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Chap029 - Chapter 29 The International Monetary System:...

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