World Monetary System
The form of the organization of monetary relations at the international level, developed historically and regulated by interstate agreements, is called as a world monetary system. In other words, the world monetary system represents the currency relations organized definitely within the limits of the world economy. Currency relations, in turn, are determined as set of payment-settlement operations between national economy.
The currency system is necessary for adjustment of the currency relations which have arisen between the countries. Concept the currency system means set of the monetary operations occurring within the limits of established agreements, the international contracts and rules of law.
Historically, before the international currency system was formed, the national currency systems regulated by rates of the national legal system functioned. The international currency relations and a currency system have been developed to the middle of 19 centuries as inseparably linked with each separate national currency system. Such communication is implemented today by means of the national banks performing foreign trade activities. Monetarist policies of the leading states and also interstate adjustment of currency relations is one more display of the given communication.
The world monetary system has the following elements, such as:
* the mechanism of formation of currency exchange rates, and also their maintenance
* an establishment of the balance sheet of cross-border payments
* determination of conditions of convertibility of currencies
* determination of a mode and working conditions of the gold and currency markets
* an establishment of the rights and obligations of interstate institutes which have regulating influence on currency relations.
Monetarist policies of the separate state and also reforming of national currency systems and relations affect a world monetary system condition leads to serious changes in its functioning. Stability of a world monetary system is determined by conformity of principles of its functioning to world economy structure, interests of the leading countries, alignment of forces in the world market. At serious change of any conditions there is a wreck of a former currency system and creation of the new. A vivid example is change of “gold standard” with the Bretton-Wood currency system, etc.
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