International Monetary System

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This system's control on steadiness was its merit. However, the world's delivery of money would essentially be restricted by the world's delivery of gold; this intrinsic lack of liquidity was a major flaw in such a system. In the period of 1920s, the gold standard was substituted by the gold bullion standard, in which nations no longer issued gold coins but backed their currencies with gold bullion and decided to buy and sell the bullion at a set price. In the 1930s, this system also was discarded. In the decades subsequent to World War II, international trade was carried out as per the gold-exchange standard.

With such a system, nations fix the value of their currencies not with regard to gold, but to some foreign currency, which is consecutively fixed to and exchangeable in gold. Most nations set their currencies to the U.S. dollar and maintained dollar reserves in the United States, which was recognized as the main currency country. At the Bretton Woods international ...

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exchange rate system 30 years ago. [5] The wonder countries of Asia had experienced severe currency depreciation and profound economic dips, the chaos had leaked into Russia and Latin America, and a harsh liquidity disaster had temporarily endangered banking systems in the highly developed countries. [6] During the 1980s, the Latin debt crisis was generally regarded as the consequence of national policy errors and the innocence of U.S. banks rather than of faults in the international financial system. [7]

The proceedings of the 1990s such as the European currency chaos early in the decade, the following introduction of the euro, the comparatively restricted Latin American crises of ...

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