-
1 基本概念
-
2 PPT
-
3 视频小课堂
-
4 自我测试
-
5 思考题
-
6 参考答案
Chapter 2 International Monetary Arrangement
ⅠThe Gold Standard (1880-1914)
A. What’s Gold Standard?
Gold Standard– currencies maintain a fixedprice relative to gold.
A gold standard is a commodity moneystandard. Thus, each currency is worth afixed amount of gold, and the currency can be readily exchanged for gold at anypoint in time.
B. Why Gold?
Gold was used as the commodity monetarystandard because:
It is a homogeneous commodity
It is easily storable, portable, anddivisible into standardized units like ounces.
It is based on a commodity with relativelyfixed supply. Since gold is costly to produce, governments cannot easilyincrease its supply.
C. The Gold Standard: Inflation depended on gold mining
Prices may still rise and fall with swings ingold output and economic growth, but the tendency is to return to a long- runstable level.
The supply of money is restricted by thesupply of gold.
Fixed supply of gold → long-run price stability.
New discoveries of gold would generate jumpsin the price level, but the period of the gold standard was marked by a fairlystable stock of gold.
Find gold in the U.S. →↑Money supply →↑prices in the U.S.
Gold leaves the U.S. →↓Money supply →↓prices in the U.S.
People today often look back on the goldstandard as a “golden era”-the relative stability of U.S. and U.K. prices overthe gold standard period as compared to later years.
U.S. and U.K. wholesale price indexes from1880 to 1976. Data are missing for World War II years in the United Kingdom.
D. The Gold Standard: How the balance of payment disequilibrium would berestored
ⅡThe Interwar Period: 1918 - 1939
World War I ended the gold standard.
Both the patriotic response of each nation’scitizens and legal restrictions stopped gold from leaving the country.
The exchange rates of most major countriesfloated (were allowed to vary).
Much of Europe experienced rapid inflationduring the war and in the period immediately following it, it was not possibleto restore the gold standard at the old exchange values.
In 1919, the United States returned to a goldstandard.
In 1925, England returned to a gold standard.
England returned to the gold standard at theold pre-war value, even though things had become more expensive during wartime. So, pound was overvalued!
Overvalued pounds →↓exports → trade deficits → gold left the country → deflation → people lost confidence and rushed to convertpounds into gold
By 1931, the pound was declared inconvertible because of a run on British goldreserves.
Once a pound was no longer convertible intogold, attention centered on the U.S. dollar.
By 1933, the United States abandoned the goldstandard after a run on U.S. gold at the end of 1931.
Ⅲ The BrettonWoods System (1944-1970):
A. The Gold Exchange Standard
An international conference at Bretton Woods,New Hampshire, in 1944.
There was a need for a system that fixedcurrencies relative to each other, but did not fix each currency in terms ofgold.
Each country fix the value of its currency interms of an anchor currency, namely the dollar.
The U.S. had to agree NOT to do anyadjustment.
B. The Bretton Woods System: All tied to the anchor and the anchor fixed with gold
To make sure that the anchor currency ($) didnot move, this currency would be tied to gold in an indirect way.
The $ would be valued at $1 = 1/35 of anounce of gold.
But this valuation would only be applicableto other Central Banks to buy.
Thus, to us a dollar bill would not have anyintrinsic value, but other central banks could ask for their dollar holdings betransformed into gold.
This created pressure on the U.S. to notinflate their currency too much.
C. The Bretton Woods System & IMF
Each country’s central bank was committed tomaintain its fixed exchange rate with $.
The International Monetary Fund (IMF ) wascreated to monitor the operation of thesystem and provide short-term loans to countries experiencing temporary balanceof payments difficulties.
In the case of a fundamental disequilibrium,a country’s fixed exchange rate could be adjusted by applying for permissionfrom the IMF.
This exchange rate system is similar to theadjustable peg exchange rate system.
D. How to Fix the Exchange Rate?
During the Bretton Woods System, everycurrency fixed its value with the U.S. dollar.
A shift in the supply or demand of a currencylead to an imbalance that the Central bank had to adjust by directlyintervening in the foreign exchange market.
How to Fix the Exchange Rate?
Central Bank Intervention
E. The Breakdown of the Bretton Woods System
Note that the U.S. Federal Reserves Bank didnot have to do anything in the exchange rate market. It was other centralbanks’ responsibility to fix their exchange rates with dollar.
Bretton Woods system worked well until 1960,after the U.S. ran large chronic balance of payments deficits in the late1950s.
The U.S. deficits became a concern in Europeand Japan (countries with surplus), since they had to accumulate more and moredollar reserves to peg their exchange rates with dollar. It became questionablewhether the dollar was worth as much gold as it claimed.
One of the options was to devalue the dollarin terms of gold.
In 1971, President Nixon suspendedconvertibility of dollar into gold. He also imposed a 10 percent tariff on allforeign imports to pressure other countries to revalue their currencies againstthe dollar. Then, most major currenciesbegun to float against the dollar.
In Dec. 1971, an international monetaryconference (Smithsonian Agreement) was held to realign the exchange rates ofmajor currencies.
The dollar price of gold was raised to$38/ounce, but this was only symbolic because Nixon’s suspension remained.
Speculators started to attack currencies thatwere “in trouble” such as the pound.
Since England had trade and balance ofpayments deficits, speculators expected the pound to devalue. So, they tried tosell pounds.
This created more pressure for the pound todevalue and made it even harder for Bank of England to fix the exchange rate.
In June 1972, the pound began to float.
Speculators moved on to the next troubledcurrencies.
Finally, by March 1973, the Bretton Woodssystem was officially ended.
1. Special Drawing Rights (SDR)
This “currency” was issued by theInternational Monetary Fund (IMF), but never existed in physical form (no banknote or coins, just accounting numbers).
SDR was created in 1969 to support theBretton Woods system.
SDR was used as an official reserve tosupport the domestic exchange rate in addition to gold. Since the supply ofgold and US dollars was insufficient for the rapid growth of world trade, theSDR provided more liquidity to the world markets.
After the end of Bretton Woods system, SDRhas transformed its role to become international reserves and to settleinternational accounts between central banks.
On May 19th, 2011 one SDR was worth$1.59. The value is computed by theweighted value of the Euro, the Japanese Yen, the Pound Sterling and the U.S.dollar.
2. International Reserve Currencies
The U.S. dollar is still, by far, thedominant reserve currency.
Why did we not see the German mark, Japaneseyen, or Swiss franc emerge as the dominant reserve currency?
The governments in these countries haveresisted a greater international role for their monies.
This is because any change in demand fortheir monies could interfere with their domestic monetary policy actions.
the euro emerges as a dominant reservecurrency, but still only accounts for 26.7 percent of total internationalreserves.
3. The Role of International Reserves
