The project plan outlines delivering a service to meet client requirements, identifies key success factors like satisfying stakeholders and meeting objectives on time and budget, and describes implementation through tasks, procedures, tools, and change control alongside required people, equipment, and location resources.
The document provides an overview of the history and evolution of international monetary systems over the past 150+ years. It discusses four main systems:
1) The gold standard (1816-1914) where currencies were pegged to gold. This provided stable exchange rates but countries struggled to maintain adequate gold reserves.
2) The Bretton Woods system (1945-1971) established the IMF and World Bank. Currencies were pegged to the US dollar, which was pegged to gold. This provided stability but collapsed as US trade deficits grew.
3) Exchange rate regimes can be fixed, where a currency is pegged to another, or floating. Fixed regimes provide stability but limit monetary policy flexibility.
The Bretton Woods system established the international monetary order that existed from the end of World War II until the early 1970s. It was created at the Bretton Woods Conference in 1944 and established the World Bank and International Monetary Fund. The system tied global currencies to gold and used adjustable peg exchange rates within 1% limits. It aimed to prevent competitive currency devaluations and economic nationalism that damaged the global economy in the 1930s. The US-led system reflected Harry Dexter White's plans over John Maynard Keynes' proposals, given the US's dominant power following World War II.
The document discusses the history and evolution of international monetary systems. It describes the gold standard system before WWI, the gold exchange standard in the 1920s-1930s, and the Bretton Woods system established in 1944 which pegged currencies to the US dollar backed by gold. The Bretton Woods system collapsed in the early 1970s leading to fluctuating exchange rates. More recently, there has been a movement towards more flexible exchange rate regimes and the establishment of the eurozone in Europe.
The document discusses the history and components of international monetary systems. It describes how the Bretton Woods system established fixed exchange rates between currencies pegged to the US dollar, which was pegged to gold. This system broke down in the 1970s and the current system lacks rules for exchange rates. The document also outlines earlier gold standards and the volatile interwar period, and examines factors like currency wars and slowing growth that impact the modern international monetary system.
Exchange rates & international financial systemAshar Azam
There are different exchange rate systems that determine how currencies relate to one another. These include freely floating rates set by supply and demand, managed floats where central banks intervene in volatile markets, target zones where rates are kept within an agreed upon range, and fixed rates where one currency is pegged to another. Historically many currencies were backed by gold or silver, tying exchange rates directly to the value of the commodities, but most currencies now have no intrinsic value.
The document discusses the evolution of international monetary systems from early systems of bimetallism up to the current flexible exchange rate regime. Key points include:
- Under bimetallism before 1875, both gold and silver were used internationally as money with Gresham's Law implying the least valuable metal would circulate.
- The classical gold standard from 1875-1914 established gold as the primary global reserve asset with currencies pegged to gold and exchange rates determined by relative gold contents.
- The interwar period saw the breakdown of the gold standard and widespread currency devaluations.
- The Bretton Woods system from 1945-1972 pegged currencies to the U.S. dollar which was peg
Mgnt 4670 Ch 11 Intl Monetary System (Fall 2007)knksmart
The international monetary system describes the structure through which exchange rates are determined, trade and capital flows occur, and balance of payments adjustments are made. It includes fixed and floating exchange rate systems, as well as the roles of central banks and reasons for each type of system. Over time, the system has evolved from early forms of money and bartering to the gold standard, Bretton Woods system of fixed rates tied to the US dollar, and currently a mixed system with major currencies floating and others using fixed or managed rates.
The document provides an overview of the international monetary system, including key historical systems like the gold standard and Bretton Woods system, as well as the current floating exchange rate regime. It describes the evolution from commodity money to representative money backed by gold or silver to modern fiat currencies. The gold standard fixed currency values to gold, while Bretton Woods pegged most currencies to the US dollar, which was convertible to gold. The system broke down in the 1970s and was replaced by floating exchange rates determined by supply and demand.
The document provides an overview of the history and evolution of international monetary systems over the past 150+ years. It discusses four main systems:
1) The gold standard (1816-1914) where currencies were pegged to gold. This provided stable exchange rates but countries struggled to maintain adequate gold reserves.
2) The Bretton Woods system (1945-1971) established the IMF and World Bank. Currencies were pegged to the US dollar, which was pegged to gold. This provided stability but collapsed as US trade deficits grew.
3) Exchange rate regimes can be fixed, where a currency is pegged to another, or floating. Fixed regimes provide stability but limit monetary policy flexibility.
The Bretton Woods system established the international monetary order that existed from the end of World War II until the early 1970s. It was created at the Bretton Woods Conference in 1944 and established the World Bank and International Monetary Fund. The system tied global currencies to gold and used adjustable peg exchange rates within 1% limits. It aimed to prevent competitive currency devaluations and economic nationalism that damaged the global economy in the 1930s. The US-led system reflected Harry Dexter White's plans over John Maynard Keynes' proposals, given the US's dominant power following World War II.
The document discusses the history and evolution of international monetary systems. It describes the gold standard system before WWI, the gold exchange standard in the 1920s-1930s, and the Bretton Woods system established in 1944 which pegged currencies to the US dollar backed by gold. The Bretton Woods system collapsed in the early 1970s leading to fluctuating exchange rates. More recently, there has been a movement towards more flexible exchange rate regimes and the establishment of the eurozone in Europe.
The document discusses the history and components of international monetary systems. It describes how the Bretton Woods system established fixed exchange rates between currencies pegged to the US dollar, which was pegged to gold. This system broke down in the 1970s and the current system lacks rules for exchange rates. The document also outlines earlier gold standards and the volatile interwar period, and examines factors like currency wars and slowing growth that impact the modern international monetary system.
Exchange rates & international financial systemAshar Azam
There are different exchange rate systems that determine how currencies relate to one another. These include freely floating rates set by supply and demand, managed floats where central banks intervene in volatile markets, target zones where rates are kept within an agreed upon range, and fixed rates where one currency is pegged to another. Historically many currencies were backed by gold or silver, tying exchange rates directly to the value of the commodities, but most currencies now have no intrinsic value.
The document discusses the evolution of international monetary systems from early systems of bimetallism up to the current flexible exchange rate regime. Key points include:
- Under bimetallism before 1875, both gold and silver were used internationally as money with Gresham's Law implying the least valuable metal would circulate.
- The classical gold standard from 1875-1914 established gold as the primary global reserve asset with currencies pegged to gold and exchange rates determined by relative gold contents.
- The interwar period saw the breakdown of the gold standard and widespread currency devaluations.
- The Bretton Woods system from 1945-1972 pegged currencies to the U.S. dollar which was peg
Mgnt 4670 Ch 11 Intl Monetary System (Fall 2007)knksmart
The international monetary system describes the structure through which exchange rates are determined, trade and capital flows occur, and balance of payments adjustments are made. It includes fixed and floating exchange rate systems, as well as the roles of central banks and reasons for each type of system. Over time, the system has evolved from early forms of money and bartering to the gold standard, Bretton Woods system of fixed rates tied to the US dollar, and currently a mixed system with major currencies floating and others using fixed or managed rates.
The document provides an overview of the international monetary system, including key historical systems like the gold standard and Bretton Woods system, as well as the current floating exchange rate regime. It describes the evolution from commodity money to representative money backed by gold or silver to modern fiat currencies. The gold standard fixed currency values to gold, while Bretton Woods pegged most currencies to the US dollar, which was convertible to gold. The system broke down in the 1970s and was replaced by floating exchange rates determined by supply and demand.
The international monetary system refers to the set of rules and institutions that govern foreign exchange between nations. Historically, systems included the gold standard and Bretton Woods system of fixed exchange rates pegged to the US dollar and gold. The collapse of Bretton Woods in 1971 led to a floating exchange rate system today where currencies fluctuate based on market forces. Current systems range from independent floating to managed floats and pegs that allow some flexibility. Understanding the monetary system helps managers with currency management, business strategy, and relations with governments.
international monetary system are sets of internationally agreed rules, conventions and supporting institutions, that facilitate international trade, cross border investment and generally there allocation of capital between nation states.
Bretton Woods system of monetary management Avinash Chavan
1. The Bretton Woods system established rules for international monetary management among major industrial states in the mid-20th century, including fixed exchange rates tied to the US dollar and gold.
2. The Bretton Woods conference in 1944 aimed to rebuild the international economic system and prevent competitive currency devaluations that exacerbated the Great Depression. It established the IMF and World Bank.
3. The collapse of Bretton Woods in 1971 ended convertibility of the US dollar to gold, making it a fiat currency and others like the pound floating currencies.
The chapter discusses the development of the international monetary system from the Bretton Woods Conference in 1944. Key points:
- Countries realized after WWII that political freedom alone was insufficient and economic cooperation was needed for development.
- The Bretton Woods Conference established the IMF to oversee the new monetary system based on fixed exchange rates and use of the US dollar and gold standard.
- The system helped sustain trade growth but faced challenges of debt crises and fluctuations caused by moving to floating exchange rates in the 1970s. The balance of payments tracks a country's total economic relations internationally through trade, investment, aid and other flows.
The history of international monetary systemSuleyman Ally
The document discusses the history and evolution of international monetary systems from 1816 to present. It describes the gold standard system from 1816-1914, the Bretton Woods system from 1945-1971, and modern exchange rate regimes. The gold standard linked currencies to gold, while the Bretton Woods system established a US dollar-backed system. Countries now choose between fixed exchange rates, where a currency is pegged to another, or floating rates, where the market determines a currency's value.
The document discusses the international financial system and how it has evolved over time. It covers key aspects like the gold standard, Bretton Woods system, and flexible exchange rate regimes. The international monetary system (IMS) refers to the body of rules and conventions that govern international financial transactions and deal with imbalances in payments between countries. The IMS has transitioned from the gold standard to the Bretton Woods system to today's flexible exchange rates.
The international monetary system refers to the global network of governments and financial institutions that govern international payments, capital flows, and currency exchange rates. It aims to facilitate international trade and investment. Historically it has taken different forms, including the gold standard (1875-1914), the Bretton Woods system (1945-1972), and currently a flexible exchange rate regime. The International Monetary Fund was established in 1945 to oversee the system and provide emergency loans to countries facing balance of payments crises. It works to promote global monetary cooperation and sustainable economic growth.
International Monetary System And Financial MktsKaustabh Basu
The document discusses the international monetary system and exchange rate regimes. It provides an overview of money and trade between nations, the need for an international arrangement on currency exchange and conversion. It describes the historical evolution from the gold standard to the Bretton Woods system of fixed exchange rates pegged to the US dollar and gold. Following the collapse of Bretton Woods in the 1970s, countries adopted various floating and fixed exchange rate regimes, with limitations to achieving complete exchange rate stability, monetary policy freedom, and financial integration globally.
International monetary system ppt @ bec doms mba bagalkotBabasab Patil
This document provides an overview of the evolution of international monetary systems throughout history, including bimetallism, the classical gold standard, the Bretton Woods system, and the current flexible exchange rate regime. It discusses key concepts like fixed versus floating exchange rates and outlines several international monetary crises like the Mexican Peso Crisis and Asian Currency Crisis. The document also describes the development of the European Union's monetary integration, from the European Monetary System to the establishment of the Euro currency.
The document provides a detailed overview of the history and evolution of the international monetary system from the gold standard era to the present day. It discusses major historical currency systems and events, including Bretton Woods, the rise of the US dollar, and the creation of the Euro. It also examines exchange rate regimes, factors influencing currency choices, and debates around achieving monetary cooperation versus independence.
International monetary system and foreign exchangeNeha Suman
The document discusses several topics related to foreign exchange and currency markets:
1. It outlines the functions of currency as a medium of exchange, unit of account, and store of value.
2. It describes the international monetary system and how foreign exchange works through over-the-counter markets and exchanges.
3. The US dollar is highlighted as the most popular and widely traded currency, often used as an intervention and reserve currency.
4. Various exchange rate regimes and theories like Purchasing Power Parity are explained.
The international monetary system refers to the institutional arrangements that countries adopt to govern exchange rates. There are several types of exchange rate systems, including floating rates where currencies fluctuate based on market forces, pegged rates where a currency's value is fixed to a reference currency, and fixed rates where currencies are fixed against each other at agreed upon rates. Historically, the gold standard and Bretton Woods system established important international monetary frameworks, but both ultimately collapsed due to economic and political pressures. Today, countries employ a variety of exchange rate regimes, and the IMF continues to play a role in responding to financial crises.
Chapter 8 9 international monetary system (2)Elyas Khan
(1) The document discusses different international monetary systems including the gold standard, Bretton Woods system, and floating exchange rate system.
(2) It outlines the key features and rules of each system as well as their advantages and disadvantages. The gold standard collapsed due to World War 1 while Bretton Woods ended due to the Triffin dilemma and the U.S. abandoning the gold standard in 1971.
(3) The document also debates whether countries should return to fixed exchange rates or continue with floating rates, noting there are good arguments on both sides and the appropriate system depends on a country's individual circumstances.
This chapter introduces students to the international monetary system and how it has evolved over time. It discusses key historical exchange rate regimes like bimetallism, the classical gold standard, and Bretton Woods system. It also examines recent currency crises in Mexico, Asia, and Argentina. Fixed regimes aim for stability but lack flexibility, while flexible rates create uncertainty for trade.
The international monetary system refers to the set of rules and institutions that facilitate international trade and investment. Historically, there have been several international monetary systems, including bimetallism, the classic gold standard, and the Bretton Woods system. The classic gold standard from 1879-1914 tied currencies to gold, allowing for fixed exchange rates and free capital movement. However, it lacked mechanisms for stabilizing global prices and suffered from economic volatility.
The international monetary system consists of rules and institutions that govern foreign exchange rates, trade, and capital flows between countries. It has evolved over four stages: the gold standard (1875-1914), the interwar period (1915-1944), the Bretton Woods system (1945-1972), and the floating exchange rate regime since 1973. Under the Bretton Woods system, currencies were pegged to the US dollar, which was convertible to gold, establishing a fixed exchange rate system. However, the system collapsed in 1971 when the US suspended gold convertibility, leading to the current floating rate regime.
The international monetary system has evolved over time from bimetallism and the classic gold standard to the current floating exchange rate system. The Bretton Woods system established fixed exchange rates pegged to the US dollar, which was convertible to gold. It collapsed in the 1970s when the US suspended dollar convertibility. Currently, the flexible exchange rate regime categorizes systems as floating, pegging, or target zones. Floating rates are determined by market forces while pegging and target zones involve varying degrees of intervention to stabilize rates. The international monetary system facilitates global trade and investment by providing exchange rate stability and liquidity.
This document provides an overview of international monetary systems and exchange rate arrangements. It begins with a brief history, starting from bimetalism pre-1875, to the classical gold standard from 1875-1914, the interwar period, Bretton Woods system from 1945-1972, and the current flexible system. It then describes different types of exchange rate systems such as freely floating rates, managed floats, target zones, and fixed rates. Specific historical systems like the gold standard and Bretton Woods are explained in more detail. In summary, the document outlines the evolution of international monetary arrangements over time from commodity-backed systems to present-day mixed systems.
The document discusses the history and evolution of international monetary systems. It describes the gold standard system used in the late 19th century, the interwar period without a clear system, the Bretton Woods system established in 1944 pegging currencies to gold and the US dollar, and the move to floating exchange rates after the Bretton Woods system collapsed in the early 1970s. It also discusses features of fixed and flexible exchange rate systems used today including crawling pegs, target zones, and currency baskets.
Zimbabwe experienced a severe economic crisis in the 2000s due to high unemployment, AIDS epidemic, and declines in key industries like agriculture, manufacturing, mining and tourism. Agriculture was particularly hard hit, with wheat production falling from 300,000 tons in 1990 to less than 50,000 tons in 2007, and tobacco exports generating much less revenue. Hyperinflation also took hold as the government printed more money, and inflation rose out of control, eroding living standards. To recover, Zimbabwe would need to stabilize its currency by linking it to the US dollar or adopting a currency board system, cut government spending, and deregulate its economy.
This document discusses dollarization in Ecuador and its potential effects on development. It analyzes actual economic data from Ecuador following its official dollarization in 2000 and considers hypothetical scenarios. Dollarization aimed to lower inflation and increase stability. While it succeeded in reducing inflation, it also eliminated monetary policy autonomy and seigniorage revenues. The document explores different econometric models to assess dollarization's impact on development indicators like GDP, poverty, and unemployment, but finds projections difficult due to limited currency data and the many political factors involved.
The international monetary system refers to the set of rules and institutions that govern foreign exchange between nations. Historically, systems included the gold standard and Bretton Woods system of fixed exchange rates pegged to the US dollar and gold. The collapse of Bretton Woods in 1971 led to a floating exchange rate system today where currencies fluctuate based on market forces. Current systems range from independent floating to managed floats and pegs that allow some flexibility. Understanding the monetary system helps managers with currency management, business strategy, and relations with governments.
international monetary system are sets of internationally agreed rules, conventions and supporting institutions, that facilitate international trade, cross border investment and generally there allocation of capital between nation states.
Bretton Woods system of monetary management Avinash Chavan
1. The Bretton Woods system established rules for international monetary management among major industrial states in the mid-20th century, including fixed exchange rates tied to the US dollar and gold.
2. The Bretton Woods conference in 1944 aimed to rebuild the international economic system and prevent competitive currency devaluations that exacerbated the Great Depression. It established the IMF and World Bank.
3. The collapse of Bretton Woods in 1971 ended convertibility of the US dollar to gold, making it a fiat currency and others like the pound floating currencies.
The chapter discusses the development of the international monetary system from the Bretton Woods Conference in 1944. Key points:
- Countries realized after WWII that political freedom alone was insufficient and economic cooperation was needed for development.
- The Bretton Woods Conference established the IMF to oversee the new monetary system based on fixed exchange rates and use of the US dollar and gold standard.
- The system helped sustain trade growth but faced challenges of debt crises and fluctuations caused by moving to floating exchange rates in the 1970s. The balance of payments tracks a country's total economic relations internationally through trade, investment, aid and other flows.
The history of international monetary systemSuleyman Ally
The document discusses the history and evolution of international monetary systems from 1816 to present. It describes the gold standard system from 1816-1914, the Bretton Woods system from 1945-1971, and modern exchange rate regimes. The gold standard linked currencies to gold, while the Bretton Woods system established a US dollar-backed system. Countries now choose between fixed exchange rates, where a currency is pegged to another, or floating rates, where the market determines a currency's value.
The document discusses the international financial system and how it has evolved over time. It covers key aspects like the gold standard, Bretton Woods system, and flexible exchange rate regimes. The international monetary system (IMS) refers to the body of rules and conventions that govern international financial transactions and deal with imbalances in payments between countries. The IMS has transitioned from the gold standard to the Bretton Woods system to today's flexible exchange rates.
The international monetary system refers to the global network of governments and financial institutions that govern international payments, capital flows, and currency exchange rates. It aims to facilitate international trade and investment. Historically it has taken different forms, including the gold standard (1875-1914), the Bretton Woods system (1945-1972), and currently a flexible exchange rate regime. The International Monetary Fund was established in 1945 to oversee the system and provide emergency loans to countries facing balance of payments crises. It works to promote global monetary cooperation and sustainable economic growth.
International Monetary System And Financial MktsKaustabh Basu
The document discusses the international monetary system and exchange rate regimes. It provides an overview of money and trade between nations, the need for an international arrangement on currency exchange and conversion. It describes the historical evolution from the gold standard to the Bretton Woods system of fixed exchange rates pegged to the US dollar and gold. Following the collapse of Bretton Woods in the 1970s, countries adopted various floating and fixed exchange rate regimes, with limitations to achieving complete exchange rate stability, monetary policy freedom, and financial integration globally.
International monetary system ppt @ bec doms mba bagalkotBabasab Patil
This document provides an overview of the evolution of international monetary systems throughout history, including bimetallism, the classical gold standard, the Bretton Woods system, and the current flexible exchange rate regime. It discusses key concepts like fixed versus floating exchange rates and outlines several international monetary crises like the Mexican Peso Crisis and Asian Currency Crisis. The document also describes the development of the European Union's monetary integration, from the European Monetary System to the establishment of the Euro currency.
The document provides a detailed overview of the history and evolution of the international monetary system from the gold standard era to the present day. It discusses major historical currency systems and events, including Bretton Woods, the rise of the US dollar, and the creation of the Euro. It also examines exchange rate regimes, factors influencing currency choices, and debates around achieving monetary cooperation versus independence.
International monetary system and foreign exchangeNeha Suman
The document discusses several topics related to foreign exchange and currency markets:
1. It outlines the functions of currency as a medium of exchange, unit of account, and store of value.
2. It describes the international monetary system and how foreign exchange works through over-the-counter markets and exchanges.
3. The US dollar is highlighted as the most popular and widely traded currency, often used as an intervention and reserve currency.
4. Various exchange rate regimes and theories like Purchasing Power Parity are explained.
The international monetary system refers to the institutional arrangements that countries adopt to govern exchange rates. There are several types of exchange rate systems, including floating rates where currencies fluctuate based on market forces, pegged rates where a currency's value is fixed to a reference currency, and fixed rates where currencies are fixed against each other at agreed upon rates. Historically, the gold standard and Bretton Woods system established important international monetary frameworks, but both ultimately collapsed due to economic and political pressures. Today, countries employ a variety of exchange rate regimes, and the IMF continues to play a role in responding to financial crises.
Chapter 8 9 international monetary system (2)Elyas Khan
(1) The document discusses different international monetary systems including the gold standard, Bretton Woods system, and floating exchange rate system.
(2) It outlines the key features and rules of each system as well as their advantages and disadvantages. The gold standard collapsed due to World War 1 while Bretton Woods ended due to the Triffin dilemma and the U.S. abandoning the gold standard in 1971.
(3) The document also debates whether countries should return to fixed exchange rates or continue with floating rates, noting there are good arguments on both sides and the appropriate system depends on a country's individual circumstances.
This chapter introduces students to the international monetary system and how it has evolved over time. It discusses key historical exchange rate regimes like bimetallism, the classical gold standard, and Bretton Woods system. It also examines recent currency crises in Mexico, Asia, and Argentina. Fixed regimes aim for stability but lack flexibility, while flexible rates create uncertainty for trade.
The international monetary system refers to the set of rules and institutions that facilitate international trade and investment. Historically, there have been several international monetary systems, including bimetallism, the classic gold standard, and the Bretton Woods system. The classic gold standard from 1879-1914 tied currencies to gold, allowing for fixed exchange rates and free capital movement. However, it lacked mechanisms for stabilizing global prices and suffered from economic volatility.
The international monetary system consists of rules and institutions that govern foreign exchange rates, trade, and capital flows between countries. It has evolved over four stages: the gold standard (1875-1914), the interwar period (1915-1944), the Bretton Woods system (1945-1972), and the floating exchange rate regime since 1973. Under the Bretton Woods system, currencies were pegged to the US dollar, which was convertible to gold, establishing a fixed exchange rate system. However, the system collapsed in 1971 when the US suspended gold convertibility, leading to the current floating rate regime.
The international monetary system has evolved over time from bimetallism and the classic gold standard to the current floating exchange rate system. The Bretton Woods system established fixed exchange rates pegged to the US dollar, which was convertible to gold. It collapsed in the 1970s when the US suspended dollar convertibility. Currently, the flexible exchange rate regime categorizes systems as floating, pegging, or target zones. Floating rates are determined by market forces while pegging and target zones involve varying degrees of intervention to stabilize rates. The international monetary system facilitates global trade and investment by providing exchange rate stability and liquidity.
This document provides an overview of international monetary systems and exchange rate arrangements. It begins with a brief history, starting from bimetalism pre-1875, to the classical gold standard from 1875-1914, the interwar period, Bretton Woods system from 1945-1972, and the current flexible system. It then describes different types of exchange rate systems such as freely floating rates, managed floats, target zones, and fixed rates. Specific historical systems like the gold standard and Bretton Woods are explained in more detail. In summary, the document outlines the evolution of international monetary arrangements over time from commodity-backed systems to present-day mixed systems.
The document discusses the history and evolution of international monetary systems. It describes the gold standard system used in the late 19th century, the interwar period without a clear system, the Bretton Woods system established in 1944 pegging currencies to gold and the US dollar, and the move to floating exchange rates after the Bretton Woods system collapsed in the early 1970s. It also discusses features of fixed and flexible exchange rate systems used today including crawling pegs, target zones, and currency baskets.
Zimbabwe experienced a severe economic crisis in the 2000s due to high unemployment, AIDS epidemic, and declines in key industries like agriculture, manufacturing, mining and tourism. Agriculture was particularly hard hit, with wheat production falling from 300,000 tons in 1990 to less than 50,000 tons in 2007, and tobacco exports generating much less revenue. Hyperinflation also took hold as the government printed more money, and inflation rose out of control, eroding living standards. To recover, Zimbabwe would need to stabilize its currency by linking it to the US dollar or adopting a currency board system, cut government spending, and deregulate its economy.
This document discusses dollarization in Ecuador and its potential effects on development. It analyzes actual economic data from Ecuador following its official dollarization in 2000 and considers hypothetical scenarios. Dollarization aimed to lower inflation and increase stability. While it succeeded in reducing inflation, it also eliminated monetary policy autonomy and seigniorage revenues. The document explores different econometric models to assess dollarization's impact on development indicators like GDP, poverty, and unemployment, but finds projections difficult due to limited currency data and the many political factors involved.
This document summarizes the history of neocolonialism in Latin America from the late 19th century through the early 20th century. [1] Large multinational companies established extractive industries like banana and rubber plantations that primarily benefited foreign interests and left local workers in poor conditions when the companies left. [2] Authoritarian governments arose that concentrated power and wealth among ruling elites while suppressing democracy, indigenous groups, and political dissent. [3] This neocolonial system dominated Latin America's economies and politics and led to its increased absorption into a global order led by the United States and European powers.
the impact of multi-currency (dollarization) regime adoption on the liquidit...Takudzwa Dhliwayo
This document provides background information on the research study conducted by Dhliwayo Takudzwa. The study aims to analyze the impact of Zimbabwe's adoption of a multi-currency regime in 2009 on the liquidity challenges faced by Zimbabwean banks from 2009 to 2014. It outlines the research objectives, which include determining the causes of liquidity crisis, evaluating the impact on economic growth, examining liquidity risk management procedures, and ascertaining the impact of capitalization and possible corrective measures. The methodology included surveys of 11 commercial banks, economists, and the Reserve Bank of Zimbabwe using questionnaires and interviews. Secondary data was also obtained from published sources. Key findings revealed that major causes of liquidity crisis included the absence of a
SLIDE 1
Introduction
SLIDE 2
Zimbabwe is located at the southern part of the continent sharing its border with South Africa and Zambia
SLIDE 3
FLOW OF THE PRESENTATION
SLIDE 4
HISTORY
SLIDE 5
Political situation of Zimbabwe was similar to that of India. It suffered from british colonialism, like we had gandhiji as the pioneer of independence , they had Robert mugabe as a national hero who played a vital role in makind Zimbabwe independent from the glitches of the britishers
SLIDE 6
The post independent story Zimbabwe consisted of Robert mugabe being assigned to the post of prime minister and after a rule of 7 years he gained the presidentship of Zimbabwe in 1987
SLIDE 7
POLITICAL UPHEAVAL: the basic political reasons that led to the degradation of politics in Zimbabwe
SLIDE 8
Project murambitswina was a major cause of resentment amongst the people as under this project , in the wake of cleaning Zimbabwe of poverty and diseases, he actually inflicted terror upon the people and tortured the local populace . this project was a major cause for fuelling the hatred amongst the Zimbabweans
SLIDE 9
Instead of advising mugabe to stop the violence on the population , the then south African prime minister Mbeki maintained a QUIET DIPLOMACY to not involve in the issues of Zimbabwe.
SLIDE 10
Due to the reasons mentioned there was an overall movement and people within and beyond Zimbabwe wanted mugabe to be removed from power
SLIDE 11
Due to the strong opposition of mugabe the internal politics of Zimbabwe grew active and more and more political groups started to form a strong anti mugabe political party to contest in the elections that were goin to be held
SLIDE 12
The main opposition party against mugabe was MDC . mugabe feared that he would loose power and started inflicting physical harm on the opposition leaders and party members.
SLIDE 13
In his last pathetic efforts to win the elections, he manipulated the election process by corrupting the election officers and thus finding an easy solution to his problems.
SLIDE 14
Despite the efforts laid by mugabe to gain dominance over Zimbabwe he lost the election as MDC won 105 seats while mugabe won 93 seats…a clear indicator of the miserable defeat faced by ZANU P.F.
SLIDE 15
But due to the loss in the elections , mugabe was totally frustrated and didn’t want to leave the power over Zimbabwe so he declared the elections to be void and carried out in a corrupted manner and retained power
SLIDE 16
So we can definitely infer that mugabe became despotic and is dismantling the constitution thus indirectly pushing Zimbabwe into the slumber it experienced before independence
SLIDE 17
Till date mugabe’s dictatorial rule prevails in Zimbabwe. In world conferences he proudly talks about the prosperity of Zimbabweans but the prosperity that they actually experience will be realized only after we go through the economic position of Zimbabwe and the factors or decisions or shuld I say, blunders that contributed to its downfall
SLIDE 18
THE ECONOMIC BLUNDERS:
SLIDE 19
A brief account of the economic blunders can be summarized as follows:-
Inconsistency of exchange rates
Freezing basic commodity prices
Nationalize sectors of economy without compensation
Black markets
Land expropriation, obviation of property rights, and unrealistic price control
SLIDE 20
Inconsistency of exchange rates
Black markets of currency exchange sold their currency at a very cheaper rate than the fixed rates by government and so the value of their currency reduced drastically as time passed by.
SLIDE 21
Freezing basic commodity prices
Maintained subsidies and price controls for key commodities:-
Mugabe freezed the basic commodity prices at a fixed level. He allowed no one to increase the prices. The persons increasing the prices would be arrested…. He didn’t allow any price to be changed irrespe
Lecture 10 decolonization & neocolonialism - Belgian Congo & South AfricaLACCD
This document provides an overview of decolonization in Africa from the late 19th century to the 1990s. It discusses the concepts of neocolonialism and nationalism, key independence leaders like Nkrumah and their roles in independence movements. It also summarizes major events like the independence of Ghana in 1957, the Organization of African Unity, genocide in the Belgian Congo, apartheid in South Africa, and Nelson Mandela's release from prison in 1990. The document uses these examples to outline the general process of decolonization across the African continent.
The document discusses Zimbabwe's economy from 2009-2014. It provides statistics on inflation, exchange rates, agriculture production, mining, manufacturing, GDP, population growth, and external debt. The economy struggled with hyperinflation after land reforms reduced agricultural production and exports. Food aid was needed as food production fell below requirements.
The document summarizes the Bretton Woods system established in 1944. It discusses the goals of creating international monetary cooperation and stable currency exchange rates through the IMF and World Bank. However, within a few years, problems emerged as member nations underestimated the funds needed, draining the IMF. The end of the gold standard in the 1970s severed the final link between currencies and gold, transitioning to a system of flexible exchange rates. The IMF and World Bank continue operating, though they have faced criticism over some policies.
The international monetary system refers to the institutionalBlue Angel
This document provides an overview of the evolution of international monetary systems from the gold standard to the present day floating exchange rate system. It discusses key aspects of the gold standard (1880-1914), the Bretton Woods system of fixed exchange rates (1944-1973), and the current floating exchange rate regime established in 1973. The Bretton Woods system established the IMF and World Bank and involved countries fixing their currencies to the US dollar, which was convertible to gold. It collapsed in the 1970s due to US economic policies and Germany allowing its currency to float. The current system allows exchange rates to fluctuate based on market forces.
The Mexican Tequila Crisis of 1994 was triggered by a combination of economic and political factors that undermined confidence in the peso. Rising inflation, a growing current account deficit, and high levels of short-term foreign investment made Mexico's economy vulnerable. Political instability in 1994, including assassinations, further shook confidence. As investors withdrew funds from Mexico that year, the peso was devalued and interest rates rose, causing a recession. The crisis was resolved through IMF and US bailouts totaling $50 billion and Mexico's adoption of austerity measures.
This presentation is a comprehensive presentation of Forex Market. It starts with the history of this market from Pre Gold period, Bretton wood till current floating exchange mechanism and in Indian perspective FERA and FEMA. It then gives you an idea on size, width and extent of this market and post that it covers forex exchange, quotes, and numerical. Finally, it covers few topics like Trade Finance, LIBOR, Balance of Payment & Currency Swaps
Dr. Alejandro Diaz Bautista, Economic Policy and Stabilization in MexicoEconomist
Economic Policy Stabilization and Mexico’s 1994 Economic Crisis
(Also known as “el error de diciembre”, The December Mistake).
Alejandro Díaz-Bautista, Ph.D.
adiazbau@hotmail.com
Professor of Economics and Researcher
This document provides a summary of Mexico's 1994 currency crisis known as the "Tequila Crisis". It discusses Mexico's economic reforms in the 1980s that initially stabilized the peso but led to large current account deficits. Political unrest in 1994 and a US interest rate hike caused capital flight, depleting reserves and forcing Mexico to devalue the peso. This sparked a recession and widespread loan defaults. The government implemented programs like FOBAPROA to bail out banks and guarantee deposits, receiving IMF support. However, significant fraud was uncovered in the banking system as well.
This document provides a summary of Mexico's 1994 currency crisis known as the "Tequila Crisis". It discusses Mexico's economic reforms in the 1980s that initially stabilized the peso but led to large current account deficits. Political unrest in 1994 and a US interest rate hike caused capital flight, depleting reserves and forcing Mexico to devalue the peso. This sparked a recession and widespread loan defaults. The government implemented programs like FOBAPROA to bail out banks and broker sales to foreign investors, receiving IMF support. However, significant fraud was uncovered in the banking system as well.
The classical gold standard existed from the late 1800s to early 1900s and was characterized by countries defining currency value in terms of gold, permitting free import/export of gold, and tying a nation's money supply directly to its current account balance. The Bretton Woods system that emerged in 1944 tied currencies to the US dollar which was pegged to gold, allowing adjustable pegged exchange rates and currency devaluations under IMF supervision. IMF structural adjustment programs imposed stabilization policies like austerity measures and structural reforms to restore exchange rate stability and push growth in crisis-hit countries, though with mixed results.
The international monetary system has evolved over time from the Classic Gold Standard to the Bretton Woods system to the present system. The Classic Gold Standard tied currencies to gold, allowing free conversion of currencies into gold. The Bretton Woods system established a gold exchange standard whereby the US dollar was convertible to gold and other currencies were pegged to the dollar. It created the IMF to help manage exchange rates and payments imbalances. However, the system collapsed in the 1970s due to US spending on Vietnam and the Nixon administration ending dollar convertibility to gold.
Managing reserves, the gold standard, and historyAsusena Tártaros
1. The document discusses the history and mechanics of monetary systems like the gold standard and Bretton Woods system. It explains how countries resolved the policy trilemma of monetary autonomy, fixed exchange rates, and capital mobility under different regimes.
2. As capital mobility increased in the 1960s, the Bretton Woods system became unsustainable and countries shifted to either floating exchange rates or capital controls. After its collapse in 1971, most advanced countries opted to float while some Europeans tried to maintain fixed rates via the Euro.
3. Developing countries faced different challenges, with some maintaining capital controls while others opened capital markets but sacrificed monetary autonomy by pegging currencies. Overall the document traces how international monetary regimes have evolved over
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@ Learn how the international monetary system has evoiled from the days of the gold
standard to today's eclectic currency arrangement.
& Analyze the characteristics of an ideal currency.
@ Explain the currency regime choices faced by emerging markel countries.
& Examine how the euro, a single currency for the European Union, was created.
This chapter begins with a brief historv of the international monetary system from the days of
the classical gold standard to the present time. The next section describes contemporary cur-
rency regimes, fixed versus flexible exchange rates. and the attributes of the ideal currency.
The next section analyzes emerging markets and regime choices, including currency boards
and dollarization. The following section describes the birth of the euro and the path toward
monetary unification, including the expansion of the European Union on May 1,2004.The
final section analyzes the trade-offs betrveen exchange rate regimes based on rules, discre-
tion, cooperation, and independence. The chapter concludes with the Mini-Case, First Steps
in the Globelization of the Yuan, which details the evolution of the Chinese yuan from a
purely domestic to an increasingly giobal currencv.
F-$ist*e"y cfl the XerCer"p:aticnal fo{cnetary Systenei
Over the ages currencies have been defined in terrns of gold and other items of value, and the
international monetary system has been subject to a variety of international agreements.
A review of these systems provides a useful perspective against which to understand today's
system and to evaiuate weaknesses and proposed changes in the present system.
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Since the days of the pharaohs (about 3000 e.c.), goid has served as a medium of exchange
and a store of value. The Greeks and Romans used gold coins and passed on this tradition
through the mercantile era to the nineteenth century. The great increase in trade during
the free-trade period of the late nineteenth century led to a need for a more formalized
system tor settling international trade balances. One countrv after another set a par value
for its currency in terms of gold and then tried to adhere to the so-called rules of the game.
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60 i:,;r :; l. : Global Financial Environment
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:iarional monetary system gained acceptance in Western Europe-in the 1870s. The Unitecl
States rr,'as something of a latecomer to the system, not officially aclopting the standard
urrit 1979.
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Mgnt 4670 Ch 11 Intl Monetary System (Fall 2007)knksmart
The international monetary system describes the structure through which exchange rates are determined, trade and capital flows occur, and balance of payments adjustments are made. It includes fixed and floating exchange rate systems, as well as the roles of central banks and reasons for each type of system. Over time, the system has evolved from early forms of localized money to the post-World War 2 Bretton Woods system of fixed rates tied to the U.S. dollar and gold, and now a mixed system with major currencies floating and various arrangements for other currencies.
The document discusses various exchange rate systems and government intervention in foreign exchange markets. It begins by classifying exchange rate systems into fixed, freely floating, managed float, and pegged. It then provides details on how each system works, including examples. It also discusses currency boards, dollarization, and the euro. The document explains how governments can directly and indirectly intervene in foreign exchange markets and discusses different policy tools like exchange rate target zones. It concludes by defining international arbitrage opportunities like triangular and locational arbitrage.
The document discusses key concepts in international political economy such as exchange rates, trade balances, key currencies, and structural imbalances. It also examines important events that shaped the international monetary system such as the Nixon Shock of 1971 which ended the gold standard, the Plaza Accord of 1985 which sought to depreciate the US dollar, and several financial crises including those in Mexico in 1994, Asia in 1997-1998, Russia in 1998, and the global financial crisis of 2008.
The global financial and monetary orderTallat Satti
The document discusses the global financial and monetary order. It begins by introducing the members of the group presenting on this topic. It then provides background on the international monetary system, desirable objectives of such a system, and different types of exchange rate systems such as floating and fixed rates. The Bretton Woods system established in 1944 is summarized, including the institutions it created like the IMF and World Bank. Reasons for the decline of the Bretton Woods system in the late 1960s and 1970s are given. The Jamaica Agreement of 1976 established a new floating exchange rate system. Critics of floating rates are noted. European countries sought their own monetary solutions through systems like the "European Snake".
The purpose of this chapter is to contribute to the discussion of a number of issues concerning macroeconomic policies that should be appropriate for developing countries. We shall take into account the broader political picture of changes in the international economy, reflected objectively in terms of the nature of the balance of payments constraints facing the ‘emerging markets’ and specially the Latin American economies since the early 1990s. It is within this wider context that we present our account of the particular case of Brazil.
the Brazilian experience has some peculiarities that make it an interesting testing ground for the presumed benefits of the process of financial globalization and the policies of trade and financial opening.
Many will agree that the slow growth and extremely high inflation experienced in Brazil in the 1980s had much to do with debt crisis and the subsequent interruption of capital flows towards Latin America. Indeed, in what became known as the ‘lost decade’ Brazil experienced a severe balance of payments constraint that slowed growth and triggered the acceleration of inflation. Since the early 1990s, foreign capital started again flowing towards Brazil in large quantities, first mainly as portfolio capital but towards the end of the decade more and more as foreign direct investment. one could well have expected that this large amount of foreign capital would improve ‘quality’ (presumably increasingly ‘cold’ rather than ‘hot’ money), by alleviating the balance of payments constraint, and would have had a big effect on both inflation stabilization and in the resumption of fast economic growth.
However, what the actual record shows is that the impact on inflation stabilization, although starting a bit late, only by mid-1994, was in fact more drastic than anybody could have reasonably expected. Inflation fell spectacularly and has remained extremely low ever since. on the other hand, the growth performance was, to say the very least, extremely disappointing. this chapter will try to make sense of this experience using a combination of some features of the international situation and of particular policies followed by the Brazilian state.
Most Latin American economies followed more or less the same broad pattern of fast disinflation and slow growth with the notable exception of Chile and partial exception of Argentina. therefore the Brazilian story, in spite of its peculiarities, may arguably be seen to reflect a more general pattern.
We shall begin our discussion in the following section with a brief account of the operation of the current international monetary system, a system that we call the ‘floating dollar standard’, and of other salient features of the international trade and financial environment faced by the ‘emerging’ developing economies since the early 1990s. the third section shows how this new international environment affects and changes the nature of the balance
Global recession and new business environmentAjit Kumar
This document discusses the global financial system and international monetary system. It covers several topics:
1) The main players in the global financial system, including private banks and public central banks and international organizations like the IMF.
2) How the international monetary system determines exchange rates between currencies and provides liquidity. It requires cooperation between leading nations and organizations.
3) The evolution of the post-Bretton Woods system to floating exchange rates and the role of the IMF in regulating the system.
The document provides an introduction to the global foreign exchange (forex) market. It discusses that the forex market is the largest financial market in the world, operating 24 hours a day as it spans major financial centers around the world. It has evolved from a system of connected national markets to a single global market due to deregulation, technology advances, and other factors. Major participants in the forex market include central banks, commercial banks, corporations, investment managers, hedge funds, and brokers.
This document provides an outline for a chapter that discusses the determination of exchange rates. It begins by introducing the International Monetary Fund (IMF) and its role in exchange rate policy. It then examines the various exchange rate regimes that countries use, including pegged, floating, and managed floats. It discusses factors that influence exchange rates such as purchasing power parity and interest rates. The chapter also explores how managers can forecast exchange rate movements and how fluctuations impact business decisions.
The document summarizes the origins and consequences of Mexico's financial crisis in 1994-1995, known as the "Tequila Crisis". Key points:
1) Mexico liberalized trade and capital flows in the 1980s-1990s, leading to large capital inflows and a lending boom that left the economy vulnerable.
2) The peso collapsed in 1994 due to a change in investor sentiment amid political violence and rising US interest rates, causing a banking and economic crisis.
3) The US provided a bailout to Mexico in 1995 to stabilize the situation and prevent broader financial contagion.
Similar to International Financial Policy-Dollarization in Mexico (20)
This document summarizes a financial forum that will take place on May 30, 2015 from 10:00am to 4:00pm at the Crowne Plaza Edison Hotel in Edison, New Jersey. The document notes that the information provided is not intended for tax avoidance and clients should seek independent tax advice. It also states that MetLife and its representatives do not provide legal or tax advice and tax results may vary depending on individual circumstances.
International Trade-China-US exchange rate disputeXintong Hou
The document discusses the history of China's exchange rate policy with the US dollar and other currencies from 2005 to 2012. It notes that China initially pegged its currency, the RMB (renminbi), tightly to the dollar but gradually introduced a managed float that references a basket of currencies including the euro. By 2012, the RMB had appreciated 25-40% against the dollar since 2005. The document also analyzes the pros and cons of US pressure on China to appreciate its currency more rapidly versus allowing gradual reform, and recommends the latter approach for both economic and political reasons.
International History Book Report-The Holy Grail of MacroecnomicsXintong Hou
(1) Richard Koo argues that Japan's "Great Recession" and the Great Depression were both "balance sheet recessions" caused by excessive private sector debt that could only be addressed through fiscal stimulus, not monetary policy.
(2) Koo describes economic cycles as having both "Yang" and "Yin" phases, with fiscal policy more effective than monetary policy in "Yin" phases when the private sector is focused on debt repayment rather than spending.
(3) Koo argues that governments must implement timely fiscal stimulus during balance sheet recessions and rebalance global trade to address imbalances that fueled crises like the global financial crisis.
social developmen final paper-Advancing social inclusion for China's internal...Xintong Hou
The document discusses social exclusion faced by internal migrant workers in China and proposes recommendations to address this issue. It notes that over 160 million people have migrated from rural to urban areas for work but face barriers in accessing social services due to the hukou system. Two case studies on projects in Africa and Indonesia that aimed to extend social security to migrant workers are examined. Key recommendations include improving data collection on migration, establishing mechanisms to protect migrant workers' rights, and supporting bilateral and multilateral agreements between local governments to provide equal treatment.
Public Policy Ananlysis final paper-China's land property rights problemXintong Hou
The document discusses China's land property rights problem. It provides historical context on land reform in China, from private land ownership after 1949 to collectivization in the 1950s-60s. The household responsibility system in the late 1970s gave farmers land use rights but not ownership. Current problems with vague land rights include land expropriation by local governments, lack of due process and compensation for farmers, and uncertainty over land rights as 30-year contracts expire. Solutions proposed focus on political feasibility, such as issuing documentation of land rights, improving compensation standards and procedural fairness in land taking, and monitoring local government implementation.
Managing NPOs final paper-Managing NPOs in ChinaXintong Hou
This document discusses managing non-profit organizations (NPOs) in China. It begins with defining NPOs in China according to government regulations. It then performs a SWOT (strengths, weaknesses, opportunities, threats) analysis of China's NPOs. The strengths include their focus on development and social services due to ties to the government. Weaknesses include a lack of independence and mission-driven work, as well as poor social mobilization abilities. Opportunities include more development space encouraged by the government's needs and increasing public support after the 2008 Sichuan earthquake. The main threat comes from China's political and legal environment for NPOs.
Managing natural resources research paper-China’s land reform, feminization o...Xintong Hou
This document summarizes the current literature on gender and natural resource management approaches, and discusses the history of land reform and status of women's land rights in rural China. It reviews two main strands of gender and environment theory, as well as three approaches adopted by developers - WED, WID, and GED. The GED approach that emphasizes dynamic social relations is adopted for analyzing rural women's land rights and feminization of agriculture in China. It then discusses China's land reform history from 1949 to 1978. Despite some gains, women's land rights are still limited in reality, and they can lose land due to marriage, divorce or widowhood. Data shows difficulties for newly married, divorced and widowed women to retain or obtain land
Gender and deveopment final paper-Mitigating China's skewed sex ratio at birthXintong Hou
The document discusses two projects aimed at mitigating gender issues:
1) A project in India addressed skewed sex ratios by mobilizing communities, curbing sex-selective abortion, and advocating for enforcement of anti-sex selection laws. It saw mixed success due to some partner organizations' limited capacities.
2) An international project examined policies through research on men's attitudes and provided strategies for engaging men in gender equality issues like health, violence, and caregiving. It offered insights but long-term impact depends on policy and social changes.
The projects showed community mobilization and addressing underlying social norms are important to mitigate gender issues. They complement each other through grassroots and policy-level approaches.
3. Introduction of Dollarization in Mexico
Foreign Exchange Regime of Mexico – A Historical Perspective
Pros and Cons—On-going debate on dollarization in Mexico
& other LatinAmerica countries
Dollarization in Mexico
4. Introduction
What is dollarization?
Currency Substitution:The use of a foreign currency in transactions in place of the domestic
currency
Dollarization is the degree to which real and financial transactions are performed in dollars
relative to those realized in domestic currency
Measure: The proportion of dollars to domestic currency circulating at any point in time.
Full dollarization vs Partially
Official vs unofficial (Mexico)
5. Why is dollarization emerged?
Domestic residents have strong incentives to
diversify the composition of their currency holdings.
Individuals and firms engaged in international exchange have
similar transaction and portfolio incentives
Border transactions is particularly important in the Mexican case
Tourism
There is a greater incentive to diversify the portfolio of liquid money
assets under floating rates
Depreciation pressure on Peso
trillema
Introduction
6. Summary of Mexico’s exchange rate regimes since 1954
Date Regime Exchange Rates Quotes
Beginning Ends
April 19, 1954 – August 31,
1976
Fixed Rate Fixed $ 12.50 $ 12.50
September 1, 1976 – August 5,
1982
Managed floating
rate
Currency/document
transactions
$ 20.50 $ 48.79
August 6, 1982 – August
31,1982
Multiple exchange
rate
General
Preferential †
“Mexdollar' ‡
$ 75.33
$ 49.13
$ 69.50
$ 104.00
$ 49.81
$ 69 .50
September 1, 1982 – December
19, 1982
Generalized
exchange rates‟
control
Preferential
Ordinary
$ 50.00
$ 70.00
$ 70.00
$ 70.00
December 20, 1982 - August 4,
1985
Exchange's control Controlled
Special
Free
$ 95.05
$ 70.00
$ 149.25
$ 281.34
$ 281.51
$ 344.50
7. Summary of Mexico’s exchange rate regimes since 1954 (con)
Date Regime Exchange Rates Quotes
Beginning Ends
August 5, 1985 – November 10,
1991
Regulated Float Managedequilibrium
Free
$ 282.30 $ 3,073.00
November 11, 1991 – December
21, 1994
Exchange rate
bands with
managed
slippage
“FIX” $3,074.03 N$ 3.9970
December 22, 1994 – present Free Float “FIX” N$ 4.8875 ------
* Buy/sell average. Guide: $ = “old pesos”; N$ = “new pesos”
†The same exchange rate was used for buying or selling.
‡The peso traded at the specified exchange rate in effect only
from August 19-31, 1982.
8. I. Fixed rate regime (April 19, 1954 – August 31, 1976)
For several years prior to 1954, the Mexican peso was relatively stable
against the US dollar at around 8.65 pesos per USD.
In 1954, however, certain unfavorable conditions occurred in Mexico.
In order to correct these imbalances, onApril 19, 1954, the peso was
devalued and fixed at 12.50 against the dollar.
9. II. Managed floating rate regime (September 1, 1976 – August
5, 1982)
A fixed peso/dollar exchange rate of 12.50 was maintained until
September 1976
In view of the imbalances in both the current account and the
capital account, on September 1, 1976, the fixed exchange rate
regime was replaced by a managed floating rate regime.
During the managed floating rate regime there were in practice two
exchange rates: one for currency transactions and another one for
transactions with documents. Although buy/sell quotes for each
exchange rate were often different, the average buy/sell quote
usually coincided.
10. III. Multiple exchange rate regime (August 6, 1982 – August 31, 1982)
At the end of 1981 and in 1982, the Mexican economy entered a phase of instability
Thus, as of August 6, a dual exchange rate regime was introduced: a
“preferential” one and a “general” one.
However, based on the 1982 Annual Report:
“Public reaction to the dual exchange rate system was one of surprise and
uncertainty regarding the foreign exchange market's future trend.”
Following the announcement of the reopening of the foreign exchange market
in banks on August 19, a third peso/dollar exchange rate was introduced which
fixed the peso at 69.50 against the dollar for the settlement of foreign-currency
denominated obligations payable in Mexico. Such obligations would henceforth be
known as “mexdollars‟…”
11. IV. General controlled exchange rate regime
(September 1, 1982 – December 19, 1982)
Despite the foreign exchange regulatory measures, at the end of August
some speculative movements in the foreign exchange market further
eroded Central Bank foreign reserves. Protecting international reserves
thus became the focal point of foreign exchange policy.”
On September 1, 1982, the “general controlled exchange rate regime” was
introduced.
Two exchange rates were also introduced: a “preferential” one and an
“ordinary” one determined by Banco de México.
The decree published in the Official Federal Gazette on September 1,
1982 stated that “Banco de México… will determine when the preferential
exchange rate applies and when the ordinary exchange rate applies as well
as the need for any temporary or permanent special exchange rates.”
12. V. Controlled exchange rate regime (December 20, 1982
– August 4, 1985
Following the presidential changeover in December 1982, on
December 13 that year the Official Federal Gazette announced a
controlled exchange rate system which would replace the
generalized exchange rate control as follows:
“Two foreign currency markets will exist side by side within the
Mexican Republic: a controlled one and a free one. “
13. The controlled foreign exchange market covers the following concepts:
a) Exports by private individuals or corporations …
b) Assembly plant payments…
c) Principal, interest and other concepts determined by Banco de México on foreign-
currency loans taken out by the Federal Government, Federal Government Entities
and other companies located in Mexico…
d) Imports of merchandise and demonstrable related expenses payable abroad and
determined by the Department ofTrade…
e) Expenses corresponding to the Mexican Foreign Service and quotas and
contributions corresponding to Mexico‟s participation in International Organizations;
and
f) Concepts generally determined by the Ministry of Finance and Public Credit at
Banco de México‟s suggestion, based on their importance to the domestic economy
or similarity or connection to aforegoing ones…”
Controlled Market
14. The free market covers foreign currency transactions not subject to the controlled
market.
Free market transactions, including the buying and selling, possession and transfer
of foreign currency, are not subject to restrictions.
Exchange rates agreed on by the contracting parties will apply to foreign currency
buy/sell transactions covered by the free market.
Free Market
15. VI. Regulated floating rate regime (August 5, 1985 –
November 10, 1991)
Towards the end of 1985, it was considered that foreign exchange policy
at the time did not take account of the prevailing and expected trend in
monetary aggregates or their impact on international reserves, as the
exchange rate moved evenly in accordance with a daily slippage and not in
accordance with prevailing conditions. Therefore it was announced that:
“…as of August 5, a regulated floating system will be introduced to replace
the even slippage in effect since December 1982. Under the new system
the controlled exchange rate will be modified on a daily basis by not
necessarily even amounts and not abruptly”
16. VII. Exchange rate band with managed slippage regime
(November 11, 1991 – December 21, 1994)
In order to “provide exporters and assembly plants with a stimulus” as of
November 11, 1991, exchange rates were no longer managed and the
free and controlled exchange rates were unified.The new system
consisted of letting the exchange rate float within a band which widened
on a daily basis.The floor of the band was set at 3,051.20 pesos against
the dollar while the ceiling was adjusted upwards by 20 cents daily
(including Saturdays and Sundays) from 3,086.40 pesos. On October 21,
1992, the ceiling’s slippage was increased to 40 cents daily.
17. VIII. Free floating regime (December 22, 1994 – present)
In 1994, several events occurred in Mexico which caused market instability
and resulted in a speculative attack on Banco de Mexico‟s international
reserves at the end of that year, making the exchange rate band regime
unsustainable.
Thus, on the evening of December 19, 1994, the Foreign Exchange
Commission reached an agreement to replace the previous exchange rate
regime with a floating rate regime.
Under the floating rate regime, which has remained in effect ever since, the
exchange rate is determined by the free market without the intervention
of the authorities.
18. Dollarization and Exchange Rate Regime
Examine the trend of ratios of foreign to domestic currency demand deposits
and total deposits held in Mexican private financial institutions from 1933 to
1976
19. Dollarization and Exchange Rate Regime
During the first fixed exchange rate period (from November 1933 until March
1938) the demand deposit ratio fell consistently.
In March of 1938, President Cardenas nationalized the oil industry and the
peso was allowed to float again for thirty- one months. A new process of
dollarization began with the floating of the peso.
The dollar/peso deposit ratio reached its highest point in September 1940,
and declined substantially following the establishment of a fixed peso/dollar
exchange rate .
20. Dollarization and Exchange Rate Regime
A new period of floating exchange rates lasting only eleven months took
place between July 1948 and June 1949; the dollarization coefficient
increased from 7.5 to 11.5 percent during the float.
The new parity established in 1949 (8.65 pesos to a dollar) lasted until 1954
when the peso was devalued approximately 45 percent.The exchange rate
was then maintained at 12.5 pesos to a dollar until September 1976 when
authorities decided to float the peso once more.
The dollarization coefficients climbed once more with the 1976 devaluation
Then while the checking deposit peso/dollar ratio declined after the third
quarter of 1977, the total deposit ratio has remained at substantially higher
levels.
21. Dollarization and Exchange Rate Regime
The largest jumps of the dollarization ratio (after 1937) occurred in 1940, 1952,
1954, 1957-58, and 1976. Of these dates, 1940, 1952, 1958, and 1976 correspond
to the last year of the incumbent administration. Of these dates, 1940, 1952,
1958, and 1976 correspond to the last year of the incumbent administration,
while a devaluation also occurred in 1954 and 1976.
Conclusion: Both devaluation expectations and perceptions of possible
"economic regime" changes (or increased political risk) associated with the
renewal of the administration must play an important role in explaining the
historical record of Mexican dollarization.
22. Pros and Cons of Full Dollarization
Benefit
1. In the short run is the decline of inflation rates and inflation expectations.
Full dollarization eliminates the risk of depreciation of the domestic
currency, a contributing factor to the acceleration of inflation.
2. Enhancement of economic policy credibility.The high cost of reversing full
dollarization could restore confidence in policymakers’ long-term
commitment to price stabilization and fiscal discipline.This gain in policy
credibility reinforces the reduction in inflation fears.
3. Reduction of the cost of borrowing. Use of the US dollar eliminates the
devaluation risk and should reduce interest rates.
23. Benefit and Cos t of Full Dollarization
Cost
Countries are likely to be reluctant to abandon their own currencies, symbols of
their nationhood, particularly in favor of those of other nations. As a practical
matter, political resistance is nearly certain, and likely to be strong.
From an economic point of view, the right to issue a country's currency provides its
government with seigniorage revenues, which show up as central bank profits and
are transferred to the government.They would be lost to dollarizing countries and
gained by the United States unless it agreed to share them.
A dollarizing country would relinquish any possibility of having an autonomous
monetary and exchange rate policy, including the use of central bank credit to
provide liquidity support to its banking system in emergencies.
24. Panama-Full Dollarization
Panama was the first fully dollarized economy
in Latin America.
After the country gained independence from
Colombia in 1904, the US dollar became the
legal tender for transactions and the domestic
currency.
Panama’s decision to adopt full dollarization
responded to political and historical reasons
rather than economic ones.
25. 1. Stability of output and prices
an average stable growth rate of 4.4%, exceeding the average growth rates of
Central American countries.
average inflation rate remained very low (1.1%) and stable (0.4% of volatility)
2. Promotion of fiscal discipline
Foreign debt began to decline in 1996 thanks to an external bond exchange
and a debt reduction operation.
Benefits
26. Cost
Increasing vulnerability to external and internal shocks
In the 1960s, political conflicts over the Canal Zone resulted in the massive
withdrawal of domestic deposits, offset by an increase in domestic lending.
The increase in international oil prices in 1973 and 1978 caused increases in
domestic prices, resulting in high inflation rates.
A major crisis came in 1987 and 1989, as a result of political tensions
between the governments of Panama and the United States. Banks
borrowed abroad and reduced their liquid assets to compensate for the loss
in domestic resources, but also reduced lending.
Real GDP decreased 15.6% in 1988 and 0.4% in1989, accompanied by large-
scale capital flight.
The effect of the financial crises in 1997-1998 was more pronounced in
Panama’s dollarized economy because of the increase in interest rates. In
2001, Panama’s GDP grew 0.3%, the lowest growth rate in the decade
27. Ecuador’s recent experience with full dollarization
In January 2000, President Jamil Mahuad called for full dollarization to
avoid the collapse of the banking system.
Ecuador started enjoying the expected benefits of full dollarization
even before the US dollar was officially adopted on September 9, 2000
enhanced credibility
release of frozen bank deposits
Lower inflation
29. Critics
Ecuador is still vulnerable to external shocks due to its dependency on
revenues from oil and external financing. Full dollarization imposes an
additional cost to this vulnerability: the lack of flexibility of economic
policies to respond to real, financial and political shocks.
An additional challenge to the dollarization process is the circulation of
counterfeit currency.
Political consensus will be the greatest challenge for structural reform in
Ecuador.
Full dollarization has helped Ecuador reduce inflation and enhance policy
credibility and has supported economic stability in the short run. In the
long term, however, further benefits for economic growth and
development will depend on structural and institutional reforms.
30. Experience from above Countries
Full dollarization can help countries achieve lower inflation, economic stability and growth.
Full dollarization enhances policy credibility and encourages foreign investment. It
promotes fiscal discipline, a competitive financial system and economic integration with
international markets.
However, countries implementing full dollarization must establish structural programs and
institutional reforms to ensure that short-term stability develops into long-term economic
growth.
32. Success Factors
Identify elements that are key to the success of the project, such as:
Satisfied clients or stakeholders
Met project objectives
Completed within budget
Delivered on time
36. Project Schedule and Milestones
Milestone 1
• January 10
Milestone 2
• April 10
Milestone 3
• July 10
Milestone 4
• October 10
37. Risk Management Plan
Risk Probability Impact Owner Mitigation Plan
Budget cuts may
reduce staff, affecting
project scope and
schedule
Medium High
Project
Manager
See appendix for a phased
implementation plan
38. Quality Management and Performance Measures
Define quality management plans
How will you monitor and control costs?
How will you monitor and control schedule?
Unofficial dollarization. Unofficial dollarization occurs when residents of a country hold a large share of their financial wealth in assets denominated in foreign currency, where foreign currency lacks the legal tender privileges that domestic currency enjoys (Baliño and others 1999, p. 1). Unofficial dollarization may take a variety of forms, including holding (1) foreign-currency bonds or other noncash assets; (2) foreign-currency cash, whether possessing it is legal or illegal; (3) foreign-currency deposits in domestic banks; and (4) foreign-currency deposits in foreign banks.
The crucial difference between unofficial and official dollarization is whether the foreign currency is only used de facto, unofficially by the residents in the form of variety of assets, or whether it is a full official legal tender recognized by the government.
A recent IMF study measured unofficial dollarization by the ratio of foreign-currency deposits to the broad money supply (M2 or M3).
Official or full dollarization is a complete monetary union with a foreign country from which a country "imports" a currency, by making the foreign currency full legal tender and reducing its own currency, if any, to a subsidiary role. In officially dollarized countries, there is no domestic currency, no currency risk and, therefore, no risk of currency crises. As a result, domestic interest rate structure tends to be similar to the one prevailing in the wider monetary area. In a few countries, which we also include in this category as borderline cases--perhaps better called bimonetary systems--a foreign currency is used widely in the role of legal tender but it has subsidiary role to the domestic currency.
The difficulties that affected the US economy in 1954 ; the peso‟s financial position became gradually weaker, due to increasingly bigger trade imbalances
May require more than one slide
Higher domestic versus external inflation, the economy‘sdependence on oil revenues and the fall in the oil price adversely impacted exchange rate expectations. This encouraged the conversion of pesos into dollars, drained foreign reserves and ultimately triggered the February 1982 devaluation. At the same time, the devaluation and the March wage revision resulted in additional inflationary pressures that together with the difficulties accessing external funding further impacted expectations.”
“
In February, US interest rates began to rise, which along with the factors described below triggered a rapid
depreciation of the Mexican peso within its floating band…”
“Furthermore, in February 1994, and for some time afterwards, events of a political and criminal nature occurred, which had a strong negative impact on markets. The kidnapping of prominent businessmen and the direction of the negotiations and general sentiment related to the armed conflict in Chiapas caused an enormous amount of uncertainty, pushing the exchange rate to levels close to the band‟s ceiling