HEGEMONIC STABILITY

THEORIES OF
THE INTERNATIONAL
MONETARY SYSTEM

Presentado por:
Jessica Tatiana Quiroga

Docente:
Carlos Andrés García Vargas
 The international
monetary system
An international monetary system is a set of rules or
conventions that govern the economic policies of nations.
From a strictly national perspective, it is an unnatural
situation. Adherence to a common set of rules or
conventions requires some harmonization of monetary and
fiscal policies.
 Hegemonic stability
theories
Specialists in international
relations have argued that
international regimes
operate smoothly and
exhibit stability only when
dominated by a single
exceptionally powerful
national economy.
Hegemonic stability
theories
In particular, this "theory of the
stability of hegemony" has been
applied to the international
monetary system. The maintenance
of the Bretton Woods system for a
quarter of a century until 1971 is
attributed to the singular power of
the United States in the postwar
world, while the persistence of the
classical gold standard is similarly
attributed to the British gift of the
international economy. 19th century.
 Theoretical
Foundations of
Hegemonic Stability
Theory
Countries derive benefits
from participation in the
international monetary
system and incur attrition
costs. This could be thought
of as a transaction cost
associated with the existence
of more than one currency.
Therefore, the efficiency
gains of a common system
are analogous to those
associated with a unified
currency at the national level.
Hegemony not only has a
greater tendency to remain
within an established
international monetary
standard, it has a greater
ability to move other
countries away from that
standard. I assume a
constant world production
Q divided between the two
countries.
Hegemonic Stability
Theories of the
Genesis of Monetary
Systems
The origins of the classical gold standard are the most
difficult to assess, since in the 19th century there were
no centralized discussions, such as those of Genoa in
1922 or Bretton Woods.
Given the perceived inelasticity of world gold supplies, a
gold-based system threatened to impart a deflationary
bias to the world economy and worsen unemployment.
This concern about unemployment due to external
constraints was reinforced by another lesson drawn
from the 1920s: the costs of asymmetries in the
functioning of the adjustment mechanism.
Hegemonic Stability
Theories of the
Operation of
Monetary Systems
 Adjustment
The classical gold standard
of adjustment has often
been characterized in terms
consistent with the theory
of hegemonic stability.
External equilibrium, or
maintaining adequate gold
reserves to defend the
established gold parity, was
the main objective of
monetary policy in the
period before the First
World War.
Liquidity
According to the classical
gold standard, the main
source of liquidity was
freshly mined gold. Liquidity
was a major concern under
the interwar gold exchange
standard. Furthermore, it is
difficult to imagine an
alternative scenario in which
the US balance of payments
was zero and the world was
not illiquid.
 Lender of Last Resort
Function
But if the loss of confidence were based on economic
fundamentals, no amount of short-term lending would
have done more than delay the crisis in the absence of
measures to eliminate the underlying imbalance.
The Dynamics of
Hegemonic Declin
This instability manifested itself when the financial crisis
of 1931, undermining faith in the convertibility of the
pound sterling, caused a large-scale shift in London
balances. Eastern European countries, including Poland,
Czechoslovakia, and Bulgaria, cleared their deposits in
New York.
 Bibliografía
• https://www.gsijuman.es/que-es-el-presupuesto-de-inve
rsiones
/
• file:///C:/
Users/USUARIO/Downloads/Estados%20Financieros%20P
royectados.pdf
Gra
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