M14_MISH1438_06_IM_C14

M14_MISH1438_06_IM_C14 - Chapter 14 The International...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 14 The International Financial System Intervention in the Foreign Exchange Market Foreign Exchange Intervention and the Money Supply Inside the Fed Box: A Day at the Federal Reserve Bank of New York’s Foreign Exchange Desk Unsterilized Intervention Sterilized Intervention Global Box: Why the Large U.S. Current Account Deficit Worries Economists Balance of Payments Exchange Rate Regimes in the International Financial System Fixed Exchange Rate Regimes Global Box: The Euro’s Challenge to the Dollar Global Box: Argentina’s Currency Board Global Box: Dollarization Case : The Foreign Exchange Crisis of September 1992 The Practicing Manager: Profiting from a Foreign Exchange Crisis Case : Recent Foreign Exchange Rate Crises in Emerging Market Countries: Mexico 1994, East Asia 1997, Brazil 1999, and Argentina 2002 Case : How Did China Accumulate Nearly $1 Trillion of International Reserves Managed Float Capital Controls Controls on Capital Outflows Controls on Capital Inflows The Role of the IMF Should the IMF be an International Lender of Last Resort How Should the IMF Operate? Overview and Teaching Tips Chapter 14 shows why international financial transactions have important implications for the conduct of monetary policy. The beginning of the chapter explains how foreign exchange market intervention affects both the exchange rate, a country’s international reserves, and the money supply. It then discusses the balance of payments, but this sometimes dry topic can be spiced up for students by a discussion of the box on why large current account deficits worry economists.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
81 Mishkin/Eakins • Financial Markets and Institutions, Sixth Edition The chapter then goes on to discuss how fixed exchange rate systems work. Three applications in this section make the material come alive for students. The first examines how China has accumulated close to $1 trillion of international reserves, a subject of great interest to students. The next two examine the September 1992 foreign exchange crisis and recent foreign exchange crises in emerging market countries. These applications capture the imagination of students because huge profits were made during these crises and because government intervention in the markets was massive. These applications also give students further practice with the model of the foreign exchange market developed in Chapter 13.
Background image of page 2
Chapter 14 The International Financial System 82 The currency and financial crises in Mexico, East Asia, Brazil, and Argentina in recent years have caused policymakers throughout the world to focus on how the architecture of the international financial system might be reformed in order to limit the threat of financial crises. Concerns about international financial architecture have led to a lively debate, to say the least, about the role of the International Monetary Fund and capital controls. I use the discussion in the text on these subjects to stimulate a lively debate among the students, which gets them to realize that what happens outside the United States is still of tremendous
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 6

M14_MISH1438_06_IM_C14 - Chapter 14 The International...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online