INTERNATIONAL

FINANCE
MONETARY
SYSTEM IN
THE WORLD

https://www.youtube.com/watch?v=lN3qrFA4jXc&t=16s
The International Monetary
System

 This can be seen as a

network affecting
international payments
through Institution, rules ,
and regulations. In order to
fulfill its role effectively.
  A time element regarding the

Characteristic of elimination of balance of payments

disequilibrium among countries.

Monetary
 The choice of the unit of the account.
 International cooperation with respect
to adjustment methods.
 Promotion of free international trade.
Evolution of
International
Monetary Market
https://www.youtube.com/watch?v=HMHPNlGPAxg
The Gold Standard (1816-1914)

 It give birth to fix

exchange rate System
during World War,
countries printed more
money to finance their
military & so the money
in circulation exceeded
the gold reserves.
Interwar Period (1915-1944)

 This was the period between World War 1

& 2. During this time, Britain was replaced
by the United States of America as the
dominant financial powerhouse across the
globe.
Bretton Wood System (1945-1972)

 The focus was to establish a

uniform and liberal
International Financial
Architecture, with
independence with domestic
policies.
Current IMS

 It is a manage float system. Here, currencies are

free to float against one another in open market.
Government intervenes only when currency
needs to be stabilized.
DIFFERENT
CURRENCY
IN THE
WORLD
  Currency describes the money or official means of
payment in a country or region. 

•Why is it every country doesn’t use the same currency?

 Most countries have unique economic situations and want

to make monetary decisions based on their specific
interests and needs
Table of some of
the world’s major
currency symbols
and their
abbreviations.

•List of all country’s currency

•https://www.countries-ofthe-
world.com/world-currencies.html
Changes in the value of a currency are
influenced by supply and demand.

 Currencies are bought and sold, just

like other goods are. These transactions
mainly take place in foreign exchange
markets, marketplaces for trading
currencies. Currencies increase in value
when lots of people want to buy them
(meaning there is high demand for
those currencies), and they decrease in
value when fewer people want to buy
them (i.e., the demand is low). And if a
large amount of a currency is lying
around in the market (i.e., supply), its
value will go down, just like its value
would go up if there were not much of
it in the market. 
  A Country’s
Attractiveness to
Investors
 Price of Certain
Factors Affecting Currency’s Value Commodities
 Inflation
A Country’s Attractiveness to
Investors

 Stable countries are considered

attractive destinations for
investments. The more that people
want to invest in a country, the more
that country’s currency will
appreciate or be worth. This is
because investors from other
countries need to use that country’s
currency in order to invest.
Price of Certain Commodities
Example: Oil
Oil exports make up a large
percentage of the Canadian economy.
So, if a foreign oil company wants to
buy oil in Canada, it needs to exchange
its foreign currency for Canadian
dollars. If oil prices rise, the company
will need to exchange more of its
currency for Canadian dollars, driving
up the demand for the Canadian dollar
and thus its value. Similarly, falling oil
prices mean foreign oil companies need
to spend less of their currency to buy
the same amount of oil. This reduces
the demand for Canadian dollars and
pushes its value down.
Inflation

 Inflation means higher prices and

generally lower purchasing power for a
country’s currency. If a country
experiences inflation, the prices of its
exports increase, making them less
attractive to foreigners. Inflation can
also decrease domestic demand for
domestic goods, leading a country’s
importers to exchange their currency for
foreign ones in order to buy cheaper
goods from abroad. These two effects—
reduced foreign demand and increased
supply in the market—both work to
push a currency’s value down.
FOREIGN
EXCHANGE
MARKET
  It is also called as Forex
Market is the market where
What is Foreign currencies are traded.
 The forex market is the
Exchange Market? world’s largest financial
market where trillions are
traded daily.
The value of any currency is determined by market
forces related to trade, investment, tourism and geo-
political risk.

Foreign Exchange is handled globally between banks

and all transactions fall under the auspice of the bank
for international settlements.
 The main
significance of
The Significance foreign
of Foreign exchange market
is to get the best
Exchange Market market value of
a business.
Foreign Exchange Market is a type of financial
institution which performs following functions:

•Liquidation of international currencies;

•For certain currency determines exchange rates;
•For international trades and reserves, sets auctions.
What are the Important Instruments in
Foreign Exchange Market?

•Foreign bills of exchange;

•Telegraphic transfer;
•Letter of Credit;
•Bank Draft.
Important functions of a
Foreign Exchange Market
1. To transfer finance, purchasing power from one nation to another.
Such transfer is affected through foreign bills or remittances made
through telegraphic transfer. (TRANFER FUNCTION)

2. To provide credit for international trade. (CREDIT FUNCTION)

3. To make provision for hedging facilities, to facilitate buying and

selling spot or forward foreign exchange. (HEDGING FUNCTION)
GLOBAL
BANKING
STRATEGIES
What is Global Banking?

 is an arrangement of
financial service by a
residential bank of one
country to the
residents of another
country.
 BANKING STRATEGIES
 Community Marketing
• banks range in size in capabilities, so, banking business development will
vary from market to market. small banks may only have one or two branch
offices whereas large commercial banks may have of thousands of branches
across the nations.

 Product Bundling
• successful strategy employed by all banks, such as offering free checking
account for those who open a savings account, these has become common
practice, successful strategies implement creative bundling solutions
 BANKING STRATEGIES
 Pre-Approved Products
• Consumers are more likely to say yes to something when already know they are
approved for it, including pre-approved products that pop up on a computer
screen, according to financial brand.

 Teller Referrals
• Bank tellers interact with most of the bank's clientele. Tellers perform the day-to-
day transactions, such as cashing checks, making deposits or transferring money.
Successful banks consistently train tellers to look for opportunities to cross-sell
bank products and refer customers to the right person.
 BANKING STRATEGIES

 Premier Services
• are designed to attract net worth bank clientele; this is an effective strategy to
increase bank deposit. High net worth clients often have different needs as well
as expectations.
Globalization and growing economies around
the world have led to the development of
international banking facility. The world is now
a marketplace, and each business wants to
exploit it. Geographical boundaries are no more
a concern. With access to technology, banking
facilities have grown vastly. One prime
example of it is international banking. In the
years to come, such banks would see higher
growth and higher profitability. Big business
houses are expanding themselves at a rapid
pace. To maintain the growth, these businesses
will need the financial services of international
banking. Therefore, the demand for
international banking facilities will increase.