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Period: to
Bimetallism: Before 1875
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Bimetallism: Before 1875
Bimetallism was a “double standard” in the sense that both gold and silver were used as money.
Some countries were on the gold standard, some on the silver standard, and some on both.
Both gold and silver were used as an international means of payment, and the exchange rates among currencies were determined by either their gold or silver contents. -
Period: to
Classical Gold Standard: 1875-1914
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Classical Gold Standard: 1875-1914
During this period in most major countries:
Gold alone was assured of unrestricted coinage.
There was two-way convertibility between gold and national currencies at a stable ratio.
Gold could be freely exported or imported.
The exchange rate between two country’s currencies would be determined by their relative gold contents. -
Period: to
Interwar Period: 1915-1944
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Interwar Period: 1915-1944
After the war: many countries suffered hyperinflation
By the end of 1923, German CPI was 1 trillion times as high as the prewar level.
Exchange rates fluctuated as countries widely used “predatory” depreciation of their currencies to gain an advantage in the world export market.
Attempts were made to restore the gold standard, but participants lacked the political will to “follow the rules of the game.” [economic nationalism]
Not fun for international trade and investment -
Period: to
Bretton Woods System: 1945-1972
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Bretton Woods System: 1945-1972
Named for a 1944 meeting of 44 nations at Bretton Woods, New Hampshire.
The purpose was to design a postwar international monetary system.
The goal was to exchange rate stability without the gold standard.
The result was the creation of the IMF and the World Bank.
Period of growing international investments and trade -
Period: to
The Flexible Exchange Rate Regime: 1973-Present
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The Flexible Exchange Rate Regime: 1973-Present
1973: JPY and European currencies allowed to float Jamaica Agreement (Jan 1976)
Flexible exchange rates were declared acceptable to the IMF members.
Central banks were allowed to intervene in the exchange rate markets to iron out unwarranted volatilities.
Gold was abandoned as an international reserve asset.
Non-oil-exporting countries and less-developed countries were given greater access to IMF funds.
