The international monetary system governs the exchange rate of currencies around the world

and between countries. In the video presented, it discussed the different types of exchange
rates in different countries. There are countries whose exchange rate changes every minute or
even every second due to the level of demand and supply of the currency, and also because of
the expression rates and interest rates in the country. On the other hand, there are also
countries whose currency has a fixed exchange rate with another currency.

It was also mentioned in the video that before paper currency was made as a representation of
money, the gold standard was used. However, due to some factors such as inflation, gold was
no longer used as basis for the value of currency. The International Monetary Fund and the
World Bank was then established by 44 countries at Bretton Woods in order to create a fixed
exchange rate system. However, the said system received a lot of disagreements as it is too
flexible and is harmful to the economic growth and free trade of countries.

The international monetary system affects the trade and economy of countries as it places how
much a currency should be valued when trading between different countries. Countries would
always make sure that the system gives fair and reasonable rate of their currency. Therefore,
the international monetary system should be able to give confidence to countries, to provide
sufficient liquidity for fluctuating levels of trade, and to provide means by which global imbalances
can be corrected in order for countries to adhere to it.