POLI 243 Chapter Notes -Special Drawing Rights, Managed Float Regime, Capital Control

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There is stable system, so you make use of it, while not directly impacting others. But in monetary system, it hurts others unlike normal fr: beggar thy neighbor-lower the value of currency so that its exports are more competitive. Then, it"s not like free riding because it hurts the others by selling own goods. Competitive devaluation occurred: 4 characteristic, exchange rates, value of currency relative to other currency, fixed, state decide what exactly the currency is worth (ex. Gold: . 67=1 ounce gold, government allow you to buy 1 ounce of gold with. If no control-increase in investment can lead to inflation, while decrease can cause rapid currency devaluation: political management i. In any central banking system where it can produce currency, there are ways of book keeping which can allow the system to profit, and increase revenue by creating money. Canada"s transition from paper dollar to: us-by absorbing cost of playing hegemonic role, long-term they would benefit more.

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