MGC2120 Chapter Notes - Chapter 11: Floating Exchange Rate, Bretton Woods System, Foreign Exchange Market

• School: Monash University
• Department: Management
• Course: MGC2120
• Professor: Dr Lakmal Abeysekera

Document Summary

Strength of the gold standard. International business chapter 11 the international monetary system. The system refers to the institutional arrangements that govern exchange rates. Dirty float countries try to hold the value of their currency within some range against an important reference currency. European monetary system (ems) is where several member states of the eu operated with fixed exchange rates. Gold standard: pegging currencies to gold and guaranteeing convertibility. Gold bar value is the amount of a currency needed to purchase one ounce of gold. It is simple and attractive. Gold standard worked well from the 1870s until the start of wwi. Net result was the shattering of any remaining confidence in the system. This put pressure on the gold reserves of various countries, forcing them to suspend gold convertibility. The agreement reached two multinational institutions the international monetary. Fund (imf) and the world bank.