ECO 1502 Study Guide - Final Guide: European Monetary System, European System Of Central Banks, Bretton Woods System
Document Summary
Meaning of the international monetary system : promotes price stability, lowering national debt, regulates poor countries only. Institutional arrangements countries adopt to govern exchange rates: floating exchange rate: us dollar, yen, pounds, euro. A system under which the exchange rate for converting one currency into another is continuously adjusted depending on the laws of supply and demand: pegged exchange rate: currency value is fixed relative to a reference currency. Ex: canadian dollar pegged to us dollar: dirty-float system: governor of national central bank interferes when the dollar goes crazy, fixed exchange rate: a system which the exchange rate for converting one currency into another is fixed. Ex; during ww2 some european states had the same fixed currency through the european monetary system. The gold standard (p. 327-328): country prices currency relative to gold (pegging). Practice of pegging currencies to gold and guaranteeing convertibility. Ex: 35 dollars for an ounce of gold.
