Week 10

lunes, 22 de mayo de 2023 11:39 p. m.

International Monetory System: The international monetary system refers to the institutional arrangements
that govern exchange rates.
The Gold standart: Refers to the practice of pegging currencies to gold and guaranteeing convertibility.

International Monetary Fund (IMF): Discipline

Tasked with maintaining order in the Maintaining a fixed rate brings stability Flexibility
Fixed rate imposes monetary discipline IMF lending facilities
international monetary system Adjustable parities
on countries, curtailing inflation

► Initially established to help reconstruct the war-torn economies of Europe

World Bank: To promote general ► Later, moved to lending to third-world nations for development
economic development
► Lends money by raising money through bond sales and through
subscriptions from wealthy members

Currency Crises and Financial Crises

Currency crisis: occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of
the currency
Banking crisis: is a loss of confidence in the banking system that leads to a run on banks.
Foreign debt crisis: is a situation in which a country cannot service its foreign debt obligations,

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