system. Though we are aware today that the domestic financial system can not be fullyinsulated from the global phenomenon, the situation in the immediate post-war periodwas not much different in the Group-of-ten countries
The level of economic integrationamong these countries made them inter-dependent.Sometimes a distinction is drawn between a monetary system and a monetaryorder and as Professor Robert Mundell put it :"A system is an aggregation of diverse entities united by regular interactionaccording to some forms of control. When we speak of international monetary system weare concerned with the mechanisms governing the interactions between trading nations,and in particular the money and credit instruments of national communities in foreignexchange, capital, and commodity markets. The control is exerted through policies at thenational level interacting with one another in that loose form of supervision that we callco-operation.An order , as distinct from a system , represents a framework and setting in whichthe system operates. It is a framework of laws, conventions, regulations, and mores thatestablish the setting of the system and the understanding of the environment by the participants in it. A monetary order is to a monetary system somewhat like a constitutionis to a political or electoral system. We can think of the monetary system as the modusoperandi of the monetary order." [ Mundell, 1972, p.92.].The distinction Professor Mundell makes between a monetary system and a monetaryorder is important in the sense that the chronological order that is followed here willfacilitate the understanding of the working of the world financial architecture and itsimpact on the domestic monetary policies of the member countries.
THE GOLD STANDARD
The classical gold standard emerged as a true international standard by 1880when majority of independent countries agreed to switch from bimetallism, silver monometallism and paper to the gold as the basis of their currencies. The key rule
1.The group of ten were Belgium, Canada, France, West Germany, Italy, Japan ,Netherlands, Sweden,United Kingdom and the United States.