Reaction Paper No.

2
The International Monetary System aided the trade and exchange among countries with
varying currencies. The paper expounded its role in financialization so as to its timeline of origin
and whether or not its current system needed appropriate reforms. As per reading further, by
fair means, there are terms and situations that are too foreign for me to understand. Thus, I
would inject my general thoughts about it.
The beginning of the financial system will always mention back to light on what
happened during the post-world war. The Bretton Woods Agreement was the point that I
thought was the start of the dollar hegemony. Dollar was considered as the fixed international
currency for exchange rates and tied up with the medium of exchange for gold. Yet it also
collapsed ever since the former President Richard Nixon suspended the conversion of dollar to
gold as it was also seen as overvalued. By then the international monetary system evolved, its
current system increased foreign inflows, availability of credit, and allowed residents to save
less from developing countries. Thus, as observed, dollarization still became the major basis of
foreign transactions. There are social and political consequences in adapting the dollar currency
and it’s not always in the same favor. There are still revisions as to replacements and new born
agreements to adjust the multilateral payment system of the International Monetary System.
Bottomline is, the dollar currency is still significant in use and a basis in the current flow
of exchanges and transactions. In connection to that, the International Monetary System
whether there are existing ang upcoming policies or agreements, it continues to aim for
financial stability and growth among its members and played a major role in international
financialization.