Summary of Chapter 8

Summary of Chapter 8 -...

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Summary of Chapter 8: THE POLITICS OF INTERNATIONAL MONETARY  RELATIONS 1. Characteristics of Monetary Orders THREE FUNCTIONs of MONEY: 1. Serves as a measure (or unit of value) 2. Serves as a medium (useful for intermediation) 3. Serves as a store of value (or credit) THREE MAIN CHARACTERISTICS TO DESCRIBE AND COMPARE 1. Exchange rates 2. Nature of reserves 3. Convertibility of capital EXHANGE RATES - Fixed - Freely floating Types of monetary reserves - Commodity (i.e. metal, gold, silver, etc) - National Currency (has value and widely accepted) - Third possible form is money created by international agencies CONVERTIBLITY
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- How open or closed the international financial system - How well national financial markets are integrated 4 INTEGRATED PARTS FOR A SUCCESSFUL INTERNATIONAL MONETARY SYSTEM According to W. M. Scammell 1. Need for a medium of international exchange 2. Adequate ties between nation’s financial institutions 3. Method(s) of managing balance of payments adjustments 4. Must be management of the international monetary system (Issues involved with hegemonic stability) 1) EXCHANGE RATES; FIXED vs FLOATING (p. 165) - Understandable in terms of supply and demand
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