POLSCI 2J03 Chapter Notes - Chapter 8: Currency War, Financial Transaction, Triffin Dilemma

• School: McMaster University
• Department: Political Science
• Course: POLSCI 2J03
• Professor: Robert O' Brien

Document Summary

Undergone transformation: changed from fixed to floating rates, growth of regional currencies replacing some national currencies. In the provisioning of credit, governments are replaced by the private corporations. Return to gold system proved impossible between the world wars. Since in the post- war period, the us interests dominated the system, the solution was to balance the floating and fixed exchange rates system (as per us interests) The us emerged as a creditor country after ww 2. Gold was fixed to gold for 35 dollars per ounce. The exchange rates are allowed to float in relation to the us dollars (in contrast to the gold standard, other currencies were not fixed to gold they were fixed to the us dollar) Governments retain capacity to devalue their currency in relation to the us dollars. The system relied on people having faith that the us currency would be exchange for gold at the fixed rate if there was a demand to do so.