Chapter 2:

INTERNATIONAL MONETARY SYSTEM

 Chapter 2:
INTERNATIONAL MONETARY SYSTEM
 An overview of the international monetary system
 The international monetary system before the First
World War (1914)
 The international monetary system during the
Second World War ( 1914 – 1944)
 The international monetary system after the World
War (1944 – 1990s)
 The current international monetary system
 The international financial organization
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

An overview of the international monetary system

 The national and international monetary systems
 The essence of the international monetary system
 The research contents of the international financial
system
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

An overview of the national monetary system

 Define currencies and establishments of issuing
money
 The management bodies of issuing and the currency
circulation
 Methods of moderating and managing
 The financial intermediary institutions
 Financial markets
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

An overview of the international monetary system

 Established on trading – financial relations between countries.
 The system consists of currency regimes, financial relations
between the national and the international financial institutions.
Specifically:
 The regime, foundation and defined rules of currency to
regulate the exchange rate between the currencies of different
countries.
 Methods to regulate the identity and enduring the currency’s
value of every country
 The movement of capital between countries
 The role and principles of operation of the international
financial institutions
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM
Research contents of the international
monetary system
 The formation and development of the monetary
regime: Rationale and defined rules to regulate rates
through historical periods
 Methods and tools for identifying and maintaining
the value of the currency of each country
 The formation and development of the international
financial institutions
 The impact of the international financial system on
the stability and development of countries
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

The international monetary system before the First

World War (1914)
- Commodity standard – gold and silver standard
- Gold standard (1870-1914)
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

Commodity standard – bimetallic standard

 Commodity standard
 The advent of coinage ”under value" (1540-1560)
 Rule T. Gresham (UK)
 Bimetallic standard in US (1792-1861)
 The collapse of the bimetallic standard regime (1861)
 Decision of converting dollars into gold (1879) and
Act of gold standard in the U.S. (1900)
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

Gold standard: Comments

 The golden age of the gold standard regime (1880-1914):
the international monetary systems was stable In operation
and have positive impacts on the countries
 Features and basic principles of the gold standard regime
1. Attach the value of money to currencies
2. Freedom to import and export gold
3. Gold reservation is large enough to ensure currencies
purchasing power - money backs to gold.
 Advantages and limitations of the gold standard regime
1. Advantages
2. Limitations
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM
The international monetary system during the Second
World War ( 1914 – 1944)
- The termination of the gold standard and replaced by a floating
exchange rate regime
- The re-set the gold standard in 1920 and the characteristics of the
gold exchanged standard 1925-1931
- The collapse of the world trading and financial system after the
Great crisis (1929-1933) that ended the gold standard
- The negotiation of the rebuilding of international monetary system
in 1941
- Bretton Woods Conference in 1944 and the introduction of the
Bretton Woods system: a new form of the gold standard regime -
the regime of the U.S. Dollar
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM
The international monetary system during the
Second World War ( 1914 – 1944)
 Bretton Woods system of 1944-1971
 International monetary system after the Bretton
Woods: the European Monetary System (EMS)
 The chaos of the international monetary system in
the early 1990s
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM
The Bretton Woods system 1944-1971
 The introduction of Bretton Woods monetary
system in 1944
 Characteristics and operations of the Bretton Woods
monetary system in 1944: the regime of the dollar
 The positive impact of the Bretton Woods regime
 The collapse of the Bretton Woods regime
 The pressure and sollution: The Role of the IMF and the
introduction of SDR
 The collapse of the Bretton Woods system was officially
announced on 08/15/1971
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM
International monetary system after the Bretton Woods:
the European Monetary System (EMS)
 The continuation of the Bretton Woods regime after collapsed in
1971: Jamaica Conference (1976)
 European monetary system and the operation of "European
Snake Money System" (ESMS) - the predecessor of EMS
 The birth date of 03/13/1979 EMS comprises the steps of:
1. Exchange rate determination: through conventional monetary units
2. Currency conventional ECU - European Currency Unit
3. Monetary cooperation - European Monetary Cooperation Fund
 Evaluating the performance of EMS
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

The chaos of the international monetary system in

the early 1990s
 Consequently, monetary expansion policies of most
countries after 1987 crisis
 The collapse of the Berlin Wall in 1989

 These internal disagreements in the European

Community
 Financial speculation and the impact on the domestic
economy
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

The international monetary system 1990 – 1999

 European Monetary Union: The common currency
of the European Communities EURO
 Monetary system of countries: a floating exchange
rate regime which is relatable in many countries
 The ability of monetary cooperation in Southeast
Asia and Asia
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

The current monetary system

 The economic development of countries and scale of
international financial transactions
 The role of government and changes in defining and
regulating rates
 The basic characteristics of the international system
in the integration trends and globalization
 The changing role of international financial
institutions
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM
The current monetary system
 International monetary system is characterized by the multilateral
cooperation of countries based on a regulated floating exchange
rate regime, the whole trend of integration and globalization of
countries
 Activities of international financial institutions were strengthened
and expanded in many fields of life - economic – society of
countries
 The development and stability of the European Monetary System
since 2005
 The possibility monetary cooperation in regions and the world:
Southeast Asia, South East Asia expansion and Asia
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM
The European Monetary Union
 The introduction of the common European currency on
01.01.1999
 Costs, benefits and problems of using the European
common currency
 The possibility of monetary cooperation among
countries in regions and around the world
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

The possibility monetary cooperation in

Southeast Asia and Asia
 The requirements of economic development and the
needs of cooperation on regional financial monetary

 The possibility of cooperation on financial monetary

 The challenges
 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

Research on international financial institutions

 International Monetary Fund (IMF)

 The World Bank (WB)

 The Asian Development Bank (ADB)

 European Bank (EMS)

 African Development Bank (AFDB)

 Chapter 2:
INTERNATIONAL MONETARY SYSTEM

Research questions and discussion

1. Characteristics and role of the international financial
system today for the economic development of
countries
2. European Monetary Union: The advantage, existence
and implications of the research matter
3. Opportunities for regional monetary cooperation in
Southeast Asia and Asia
4. Operations and the role of international financial
institutions entitled to Vietnam