Strengthening the International Monetary System - Taking Stock and Looking Ahead

Policy Papers ◽  
2011 ◽  
Vol 2011 (23) ◽  
Author(s):  
Keyword(s):  
Capital Flows ◽  
International Monetary System ◽  
International Exchange ◽  
Sound System ◽  
Liquidity Provision ◽  
Cross Border ◽  
Monetary System ◽  
Current Account Imbalances ◽  
Adjustment Mechanisms ◽  
Large Reserve

The current IMS has survived for over forty years, underpinning strong growth in GDP and in the international exchange of goods and capital, one of its core objectives. As a result, interdependence among the world’s economies has grown dramatically, making the existence of a sound system ever more important. At the same time, the system has exhibited many symptoms of instability—frequent crises, persistent current account imbalances and exchange rate misalignments, volatile capital flows and currencies, and unprecedentedly large reserve accumulation. These symptoms have come to a head since the 2008 crisis and brought renewed international momentum to the idea of attempting to reform the IMS. Yet the debate so far suggests little consensus on the underlying problems, let alone on the solutions. This paper identifies four root causes to these problems: inadequate global adjustment mechanisms to prevent inconsistent or imprudent policies among systemic countries; lack a comprehensive oversight framework for growing cross-border capital flows, covering both source and recipient countries; inadequate systemic liquidity provision mechanisms; and structural challenges in the supply of safe assets.

Capital Flows - Review of Experience with the Institutional View

Policy Papers ◽  
2016 ◽  
Vol 2016 (36) ◽  
Author(s):  
Keyword(s):  
Capital Flows ◽  
International Monetary System ◽  
Monetary System ◽  
Institutional View

Capital flows are an important aspect of the international monetary system. They provide significant benefits, both direct and indirect. At the same time, they also carry risks, and a key challenge for countries is how to harness the benefits while managing the risks. The institutional view on the liberalization and management of capital flows provides the Fund with a basis for consistent advice on policies related to capital flows. This paper reviews countries’ experiences with handling capital flows in the period since the adoption of the IMF’s institutional view in 2012. Based on the experience, it identifies a few areas in which the view would benefit from further clarification or elaboration.

scholarly journals EVOLUTION AND CONTEMPORARY TRENDS OF THE INTERNATIONAL MONETARY SYSTEM

2018 ◽  
Vol 1 (16) ◽  
pp. 23
Author(s):  
Branka Topić-Pavković
Keyword(s):  
International Economic ◽  
International Monetary System ◽  
Research Paper ◽  
Sustainable Growth ◽  
Monetary Integration ◽  
International Exchange ◽  
International Liquidity ◽  
Economic Relations ◽  
Monetary System ◽  
International Economic Relations

The growth dynamics of international exchange and capital flows is conditioned by the efficiency of the international monetary system whose basic task is to provide for international liquidity and smooth international payments. The tendencies in international economic relations in the time of globalisation have determined further directions for the development of the international monetary system. The breakup of the Bretton-Woods System initiated  the establishment of a new European monetary system with the aim to stabilise the exchange rates and  improve further process of integration and international economic relations. In this research paper we have pointed out to the  fact  that economic interdependence of souvereign countries leads to coordination of macroeconomic policies, and that it  can motivate  monetary integration within the monetary policy. The objective of this research paper is to emphasize the stability of the international monetary system as a prerequisite for sustainable growth of national economies and monetary union. The contemporary international monetary system is characterised by the trend of reduced number of national currencies, as this is  a  logical conseqence of increasing European integrations, but also beacuase of significant economic advanatages. Simultaneously, the costs of the euro changeover and introduction of a common currency are lower if economic performances of member countries mutualy converge.

Bitcoin, the Mother of all Bubbles or the Future of Money?

2020 ◽  
Vol 26 (2) ◽  
pp. 13-18
Author(s):  
Sebastian Ilie Dragoe ◽  
Camelia Oprean-Stan
Keyword(s):  
Standard Deviation ◽  
International Monetary System ◽  
Illegal Trade ◽  
Wall Street ◽  
Important Place ◽  
Cross Border ◽  
Monetary System ◽  
The World ◽  
Price Shock ◽  
Potential Risks

AbstractCrypto currencies have sparked great interest lately not only among regular people, billionaires and Wall Street, but it also caught the attention of national and global financial regulators across the world. In this article, we try to answer the following questions: what is bitcoin? It is money, a mean of payment, a huge bubble or just a way to evade taxes, launder money and fund illegal trade? We will answer these questions by testing whether bitcoin is a bubble with the help of right-tailed ADF tests and analyzing if the price of bitcoin has experienced shocks. We identify bitcoin price shock when the price of bitcoin is above its Hodrick-Prescott trend plus one standard deviation. Also, we will analyze if bitcoin fulfils the roles of money and if itself or a stablecoin like Libra can attain an important place within the international monetary system. We will also research the potential risks associated with the adoption of Libra, especially in poorer countries. Despite Bitcoin and Libra’s weaknesses, an advantage is that they insist on the necessity of faster and cheaper cross-border funds transfers 24/7, 365 days a year.

scholarly journals Banking crises and the international monetary system in the Great Depression and now

2011 ◽  
Vol 18 (1) ◽  
pp. 1-20 ◽  
Author(s):  
Richhild Moessner ◽  
William A. Allen
Keyword(s):  
Great Depression ◽  
International Monetary System ◽  
Banking Crises ◽  
Flexible Exchange Rate ◽  
Short Term ◽  
Liquidity Provision ◽  
The Great Depression ◽  
Monetary System ◽  
Bank Deposits ◽  
Rate Environment

We identify similarities and differences in the scale and nature of the banking crises in 2008-9 and the Great Depression, and analyse differences in the policy response to the two crises in light of the prevailing international monetary systems. We find that the scale of the banking crisis, as measured by falls in international short-term indebtedness and total bank deposits, was smaller in 2008-9 than in 1931. However, central bank liquidity provision was larger in the flexible exchange rate environment of 2008-9 than in 1931, when it had been constrained in many countries by the gold standard.

APEC Summit in Kuala Lumpur: APEC Leaders Debate Merits of Globalization; Gore Confronts Malaysian Prime Minister on Human Rights

1999 ◽  
Vol 10 (1) ◽  
pp. 111-115 ◽  
Keyword(s):  
Human Rights ◽  
Capital Flows ◽  
Technological Progress ◽  
Prime Minister ◽  
International Monetary System ◽  
Kuala Lumpur ◽  
Economic Problems ◽  
Monetary System ◽  
The World ◽  
Mental Blocks

As host to APEC this year, Malaysia feels a strong sense of responsibility that the meeting should help tackle the current economic problems. As we approach a new millennium, it is imperative that we devise and put in place a better economic and financial regime now referred to as architecture for the world. Some of these will be the result of technological progress but others will reflect the emergence of new commercial and sociological ideas and values. With your indulgence, I would like to take this opportunity to discuss the present architecture or lack of it as manifested by the anarchical and unregulated capital flows in the international monetary system. In doing so we must not be tied down by fanatical beliefs which act as mental blocks to our recognition of the facts involved.

scholarly journals Uphill Capital Flows and the International Monetary System

2017 ◽  
Vol 17 (174) ◽  
Author(s):  
Balazs Csonto ◽  
Camilo Tovar Mora
Keyword(s):  
Capital Flows ◽  
Yield Curve ◽  
International Monetary System ◽  
Transmission Channel ◽  
Term Premium ◽  
Percentage Point Increase ◽  
Monetary System ◽  
Point Increase ◽  
Reserve Accumulation ◽  
The Stability

Uphill capital flows constitute a key transmission channel through which reserve accumulation can distort the stability of the international monetary system. This paper examines and quantifies the importance of this transmission channel by examining how foreign official purchases of U.S. Treasuries influences the U.S. yield curve at different maturities. Our findings suggest that a percentage point increase in foreign official holdings relative to outstanding marketable securities reduces the term premium by 2.0–2.4 basis points at maturities of 2–3 years. These estimates are then used to gauge the role of a global policy in reducing excess reserve accumulation?e.g., a composite global reserve asset or through global liquidity facilities. Findings show that a policy that reduces the demand for Treasuries by $100 billion would increase yields by 1.5–1.8 basis points.

Borrowing Agreement with the Czech National Bank

Policy Papers ◽  
2010 ◽  
Vol 2010 (25) ◽  
Author(s):  
Keyword(s):  
Exchange Rate ◽  
Capital Flows ◽  
Financial Stability ◽  
Current System ◽  
International Monetary System ◽  
International Reserves ◽  
Adjustment Process ◽  
International Financial Crises ◽  
Monetary System ◽  
Exchange Rate Arrangements

The last comprehensive discussion of reform of the international monetary system (IMS)—the set of official arrangements that regulate key dimensions of balance of payments—international reserves, exchange rates, current payments, and capital flows—was held nearly four decades ago. In light of repeated and costly international financial crises since then, it is timely to review the structure of the IMS to assess how it can be strengthened and made more resilient. At issue is the confluence of, on one side, an unprecedented build-up in global current account imbalances and volatile cross border capital flows, accompanied by a sharp build-up of international reserves, and on the other side, the concentration of those reserves in a few reserve currencies facing new challenges in maintaining fiscal and financial stability. As pre-crisis trends appear set to resume, this tension calls for examining their broader implications for the stability and efficiency of the current system. While the paper views the problems of the IMS through this prism in the tension between high reserve demand and narrow reserve supply, it also inevitably touches on all the components of the IMS—exchange rate arrangements, capital flows, and the global adjustment process. It should also be seen in the broader context of the Fund’s recent work on IMS stability, which started with a paper focused on exchange rate arrangements last summer and will continue in coming months with another on capital flows.

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