The evolution of the world monetary systems briefly. The stages of evolution of the world monetary system

The evolution of the world monetary system is heading reproductive performance. It is defined by the main stages of the development of not only global, but also national economy. Sometimes the principles of the world monetary system begins to contradict the structure of the world economy, do not conform to the distribution of resources between major centres. This leads to a crisis of MVS. Currency conflicts arise as a result of the structural principles of the global mechanism of the changing conditions of production, trade and distribution of forces in the world. The evolution of the world monetary system, a brief account of which will be described below, is determined by the needs of the national and world economies, the need to change the balance of power. Only the flexibility and variability, the ability to adapt to the situation of financial instruments gave the Foundation for the existence and development of modern society.

Main elements: the evolution of the world monetary system

MVS has covered the way of its formation before taking a modern format. In my entire long history of the development of the principles of the system were changed 4 times, which was accompanied by the decision of the appropriate international conference. The change has been the name of the structure, which began to match the name of the city where the conference was being held.

Let's Consider the stages of evolution of the world monetary system:

• The Paris system of 1867, known as the “gold standard”. For each national currency was typical of the gold content, starting from the one used to exchange for other currencies or gold. Took place a floating exchange rate.
• Genoese system of 1922, known as the “gold exchange standard”. In addition to the gold reserves of each currency in the world currency was supported by the leading economic powers, primarily the British pound sterling.
• The Bretton woods system of 1944, known as the “dollar standard”. A prerequisite to the formation of a system became active in the development of America in the postwar period. Gold is used in limited quantities.
• The Jamaican system 1976 – 78 years, known as the ‘standard special measures lending”. SDR performed in the format of assets (specialized entries in the accounts of the IMF). The introduction of the SDR due to the desire of all countries to ensure stability in the aspect of international settlements.

“Gold standard”

The evolution of the world monetary system began with the “gold standard”, which operated from 1867 to 20 years of the 20th century. The formation of the financial structure had spontaneous. The main impetus for the Paris MVS was the industrial revolution of the 19th century and the expansion of international trade in the gold standard. The main characteristics of the financial system were the following provisions:

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• Fixed gold reinforcement of the national currency.
• The Role of a universal means of payment and world money-performed gold.
• Issuing of Banknotes, the Central Bank has varied the gold without any restrictions. The basis of the exchange lay gold parities. The deviation of the exchange rate allowed within the monetary parities, which had established a fixed exchange rate.
• International transactions along with gold, admitted the pound sterling.
• Internally, the supply of money consistent with the gold reserves of the state, which automatically regulate the balance of payments of the States.
• Lack of balance of payments was covered in gold.
• Between the States of the movement of gold was free.

This stage of development not the most effective, not the top, which reached ultimately the evolution of the world monetary system. The Paris monetary system was suffering from non-compliance participants in the global financial market. The flow of gold between countries is not always the case. England held the position of chief financial of the state to regulate not only Bank interest but also Golden threads. The main reason for the successful development of the “gold standard” was not his efficiency as a system, and the peaceful development of the world economy in the pre-war periods.

“gold exchange standard”

Stages in the evolution of the world monetary system include the dominance of the “gold exchange standard" which took place from 1922 to 30 years. After the First world war is exhausted and foreign economic relations between the countries were restored, there is a need to generate a new MVS. At the conference in Genoa, the question was raised about the fact that the capitalist countries is not enough gold for the settlement of relations in the segment of external sales calculations and other operations. In addition to gold and the British pound, the decision was made to introduce the American dollar. The two currencies has taken on the role of the international payment instrument and received the title exchange. The system adopted by Germany and Australia, Denmark and Norway. In its principles the system is almost matched its predecessor, the Paris system. Gold parity was maintained, and the role of world money was still entrusted to the gold. The evolution of the global monetary system has led to the fact that certain national banknoteswere changed to gold and other currencies, called the motto, which then is exchanged for gold bullion.

The formation of the first dependencies

The Global monetary system and their evolution, in particular the adoption of “gold exchange standard" led to the formation of the first dependencies, some from other countries. There were only two formats of exchange of national currency for gold. This is a direct intended for pounds and dollars, which played the role of slogans, and indirect, for other currencies within the system. In this aim were used a combined floating exchange rate. Through the use of foreign exchange intervention, the Nations of the world were obliged to maintain any deviations of the currency. This distribution of gold reserves among States was the basis of forming relationships.

The gold exchange standard not a long time was the main aim. After the crisis 1929 – 1922, the system was completely destroyed. In 1931, the UK renounced the gold standard and devalued the pound sterling. As a result, the number of European countries, including in India, in Egypt and in Malaysia, there was a collapse of the national currency due to the strong relationship with Britain in economic terms. In 1936 the gold standard was abandoned by Japan and France. In 1933, in America, parallel to the abandonment of the exchange of banknotes for gold was forbidden to export abroad and the last was a devaluation of the dollar by 41%. This period the evolution of the global monetary systems will remember for a long time, was the moment of transition to monetary circulation irredeemable for gold money, in other words, of credit.

“Dollar standard”

In the town of Bretton woods in 1944, the international conference brought together 44 countries around the world. An agreement was reached about the formation of the structure of correlated exchange rates of the adjustable type. The system lasted from 1944 to 1976. Its main characteristics were:

• The Role of world money got gold. In parallel was used such currency as the dollar and the pound.
• The Generated financial institution international: international Monetary Fund (IMF) and the world Bank for reconstruction and development (IBRD). The main objective of the organizations was the regulation of financial relations in the world between member countries of the system. All States member of the IMF automatically acted as members of the world Bank.
• Introduced a system of guided courses, which allow either to keep the course at the same level, or correct it by prior agreement with the IMF. It was planned to set the rates at a level which would allow States to develop effectively due to the advantages of international trade and flow of capital. In the absence of the ability to implement the program, courses were revised.
• The dollar peg to gold. The evolution of the world monetary system (briefly discussed in this article) has led to the fact that all countries sought to have dollar reserves. The right to exchange currency for the precious metal had only America at a price of 35 dollars per ounce. Other countries declared their currencies in gold or dollars, supporting them by buying or selling the most dollars in the foreign exchange market.
• The Formation of the Fund of international reserves. The reserve contribution of each state was determined by the volume of international trade and complied with 1/4 gold or dollars and 3/4 of the national currency. The proportion of the Fund directly affects the amount of loan in foreign currency from the IMF.

The world Situation in the period ‘Dollar standard”

The evolution of the world monetary system, which briefly can be seen on the example of lords in time standards, led to the fact that in the period ‘dollar standard” the direction of the development of the world economy began to ask States «big seven». They accounted for about 44.8% of the votes. America belonged to 18%, and Russia – 2.8 per cent. This formed the fact that America and other States “seven”, could directly influence the acceptance or rejection of any solutions. Since the appearance of this structure has been allocated a sufficiently large amount of material resources on the development of a significant number of countries.

Evolution of the world monetary system: table structure of loans in the company «dollar standard”

Despite the promise of the system, it did not last long in connection with the radical differences between national economies of the world. The beginning of the drop system gave a deficiency payment system of America, which gave the dollar the global reserve currency. By 1986, the external deficit was equal to $ 1 billion. In spite of the tolerance situation, the phenomenon had its consequences. In 1971, President Nixon refuses to binding nationalcurrencies to gold, as the society expect devaluation and start to actively buy gold, which is America, in accordance with the accepted obligations, is forced to sell. The dollar is released to float freely, the era of ‘dollar standard” exhausted.

“the Standard special measures of lending”

The evolution of the world monetary system, briefly referred to in the article, did not stand still and replaced the “dollar standard” came the ‘standard special measures lending”. It was adopted in the period from 1976 to 1978 and is widely used today. The main characteristics of the Jamaican currency system can be considered the following provisions:

• Major abandonment of the gold standard.
• Demonetization of gold formally adopted. The role of the precious metal as international means of payment cancelled.
• Gold parities ban.
• Central Banks retained the right to buy and sell gold as a normal commodity at a price set in a free market.
• The adoption of the SDR standard, which could be used as a world money, and also be used as a base for calculation of exchange rate, official assets. SDR is widely used for calculations of international types due to entries in the accounts and how the unit of account of the IMF.
• The Role of reserve currency received U.S. dollar and the German mark, pound sterling and Swiss franc, the Japanese yen and the French franc.
• The Exchange rate is floating, is formed on the foreign exchange market through supply and demand.
• States have a right to establish its own regime for the national currency.
• Frame rate fluctuations are not controlled.
• The formation of the closed units of the exchange format that are considered to be members of the IMF, was legitimate. A vivid example of this category of education – the European Monetary System (EURO).

The World monetary system: its nonlinear evolution

The Global monetary system in the order of their occurrence led to the formation of the European monetary system, which acts as a set of economic relations connected with the functioning of national currencies within the European economic integration. EMU – is an important component of the entire MVS. The facility includes three main components:

• ECU standard adopted in 1979, which defined a new form of reserve ECUs, which is in the format of a combination of 12 European currencies.
• Free floating exchange rate with a range of deviations within 15%, as upward and downward. Formed the mechanism of exchange rates and intervention.

Artificially created by the accounting unit according to the type of SDR and the ECU can't be used as real currency arising as a result of the integration of a number of States. Since 1999, 11 of the 15 States agreed to the introduction into circulation of the single currency-the Euro. Already in 2002 the country has given consent to the adoption of a new currency, fully integrated in the European area and fully abandoned its currency.

What criteria should correspond to the participants of the “Euro zone”?

Evolution of the world monetary system, in chronological order, which is discussed above, has not only a linear structure. An offshoot was the EMU, which can join any of the countries in the world that will fit a number of criteria:

• Inflation in the country should not more than 1.5 per cent above the figure is identical to figure on the territory of three States with a minimum increase in the cost of goods and services.
• The budget Deficit in the country should be less than 3% of GDP.
• Public debt should be within 60% of GDP.
• The Rate of the national currency within 2 years shall not cross the corridor set by the standards of the EMU (+/- 15%).

The Monetary system peculiar to industrialized Nations, controls not only the cash-settlement transactions and internal cash flows. This is the most practical solution in the modern world. In this case, the evolution of the global monetary system and contemporary monetary problems are tightly interrelated, as originated from one source.

Connectivity MFS and national financial systems

The evolution of the world monetary system, which is briefly discussed in this article began with the spontaneous functioning of the structure based on the gold reserve, and gradually modernized in a targeted and adjustable structure, which is based on the paper credit of material resources. Development of MVS is step for step, with a range of 10 years, with dominant stages of formation of the national monetary structures. In the domestic economy monetary structure was gradually transformed from a gold standard in gold bullion, then gold exchange and finally came to the paper credit system, where the main role belongs to credit funds.

The Sum total of what was the world monetary system. The table above will allow you to track the main stages of evolution.