- according to the venues of only two most important international conferences of the 1940s - the actual international structure of the world took shape not in two, but in four stages, on four international meetings 1) at Bretton Woods (USA) in July 1944, where the foundations for regulating the post-war world economy were laid; 2) in Yalta(USSR) in February 1945, where the USSR, USA and Great Britain agreed general approaches to the future political reconstruction of Europe; 3) in San Francisco(USA) in April-June 1945, when the UN Charter was adopted; and finally 4) in Potsdam(Germany) in July 1945, when the three leading countries of the anti-Hitler coalition specified a common policy towards the defeated aggressor Germany and steps to reorganize Europe.
Valentin Katasonov. "The Secret Architects of the Bretton Woods System"
The main goal of the Soviet government was transformation east European countries to a secure area USSR. The United States paid attention to world economic issues, believing that it was they that would make it possible to eliminate international relations causes of aggression. Washington believed that the war in Europe was due to the ruin of Germany after World War I and the impossibility of the economic recovery of Europe in the interwar period due to trade wars and the unwillingness of countries to negotiate among themselves in the interests of stabilizing the world economy. Experience of overcoming crisis of 1929 - 1933 in the USA with government intervention inspired the idea that the stabilization of the world economy as a whole can also be achieved with the help of global coordinating mechanisms.
Three institutions were supposed to be the key ones - International Monetary Fund (IMF), International Bank for Reconstruction and Development (IBRD), and General Agreement on Tariffs and Trade (GATT). The IMF was supposed to ensure the stability of the international monetary system and provide financial assistance states in need. The IMF's biggest step was to restore a stable gold-dollar standard and fix fixed exchange parities for the world's major currencies. The IBRD was supposed to assist the development of lagging countries with loans and investments. GATT was tasked with promoting liberalization international trade through a gradual reduction in customs tariffs and the abolition of foreign trade restrictions.
The conference for the creation of the IMF and the IBRD was held in the USA, in the city of Bretton Woods (New Hampshire), from July 1 to July 23, 1944. The signing of the GATT was delayed, it took place in Geneva in October 1947. Later, the IBRD, along with the International Association development and some other institutions has become one of the main parts World Bank, although in the literature the expressions " The World Bank” and “International Bank for Reconstruction and Development” are often used interchangeably. The IBRD and the IMF have become part of the UN system of institutions.
GATT, together with the IMF and IBRD since the 1940s, have formed a complex of world economic regulatory mechanisms, which is commonly called Bretton Woods system
Washington was looking for a compromise with Moscow, trying to involve it in the work of these bodies. USSR in 1944 - 1945 took part in the creation of the IMF, IBRD, European Economic Commission and a number of other organizations of international economic profile. The United States was ready to agree to a significant presence of representatives of the USSR in the bodies being created. According to the agreements reached at Bretton Woods, in terms of the size of the quota of votes in decision-making at the IMF, the Soviet Union was in third place after the USA and Great Britain.
But the Stalinist leadership understood that, despite such a quota, the Soviet representatives would not be able to impose their projects on the Bretton Woods institutions, or even defend their positions on an equal footing. The United States and other Western countries had a mechanical majority there, and there was no veto. The possibility of penetration of foreign capital into the Soviet zone of influence in Eastern Europe, which could lead, due to the economic weakness of the USSR, first to the financial and economic, and then to the political loss of these territories.
Overestimating the revolutionary potential of post-war Europe, expecting the "collapse of capitalism" in the near future, and overestimating the economic interest of American capital in economic cooperation with the USSR, Soviet leaders believed that the West would show compliance in dialogue with Moscow. These calculations did not materialize.
At the end of 1945, the Soviet government notified the US administration that it was not going to ratify the Bretton Woods agreements. In 1946-1947. Moscow evaded joining the GATT. The USSR retained a free hand in the sphere of international economic ties, but found itself outside the framework of the global system of economic regulation.
FEDERAL AGENCY FOR EDUCATION
STATE EDUCATIONAL INSTITUTION OF HIGHER PROFESSIONAL EDUCATION
"SAINT PETERSBURG STATE UNIVERSITY
ECONOMY AND FINANCE»
DEPARTMENT OF MONEY AND SECURITIES
Test
by discipline:
« WORLD MONETARY SYSTEM »
On topic number 2:
"Bretton Woods Monetary System"
Done: student
Chernetsova V.S.
group no. 442
4 courses, 4 years.
Faculty of Finance and Credit
Form of study: part-time
Record book number 078045
Checked: __________________
Grade:_________________
The date:____________________
Signature__________________
St. Petersburg
2011
Maintenance………………………………………………………………………………..3
1. Prerequisites for the creation of the Bretton Woods monetary system………….4
2. Basic principles of the functioning of the Bretton Woods monetary system………………………………………………………………….…….5
3. Contradictions of the Bretton Woods monetary system…………………...10
4. Causes of the collapse of the Bretton Woods monetary system………………….13
Conclusion……………………………………………………………….………22
List of used literature…………………………………..………….21
Introduction
Bretton Woods system - international system organizations monetary relations and trade settlements established as a result of the Bretton Woods Conference (July 1 to 22, 1944) Named after the Bretton Woods resort in New Hampshire, USA. The conference marked the beginning of organizations such as the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF). The US dollar has become one of the types of world money, along with gold. It was a transitional stage from the gold exchange standard to the Jamaican system, which established a balance between the supply and demand of currencies through their free trade.
It took the creation of an international monetary system that meets the current economic and political situation. The post-war monetary system was legally formalized at the UN Bretton Woods Conference in 1944 in the form of the charter of the International Monetary Fund.
During the United Nations Monetary and Financial Conference in July 1944 in Bretton Woods, New Hampshire, there was an obvious shift towards establishing cooperation between states in the monetary sphere, which was practically absent in the interwar period.
1.Prerequisites for the creation of the Bretton Woods monetary system.
Second World War led to the deepening of the crisis of the Genoese monetary system. The development of a project for a new world monetary system began during the war years (in April 1943), as countries feared shocks similar to the currency crisis after the First World War and in the 1930s.
The Anglo-American experts who had been working on the project since 1941 rejected the idea of a return to the gold standard from the very beginning. They sought to develop the principles of a new world monetary system capable of ensuring economic growth and limiting the negative effects of economic crises. The desire of the United States to consolidate the dominant position of the dollar in the world monetary system was reflected in the plan of H. D. White (chief of the department of foreign exchange research at the US Treasury Department).
As a result of long discussions on the plans of Ґ. D. White and J. M. Keynes (Great Britain) defeated the American project, although the Keynesian ideas of interstate currency regulation were also the basis of the Bretton Woods system.
Both currency projects are characterized by general principles:
free trade and movement of capital;
· balanced balances of payments, stable exchange rates and the global monetary system as a whole;
· gold exchange standard;
creation of an international organization to monitor the functioning of the world monetary system, for cooperation and
Covering the balance of payments deficit.
2.Osnovnye principles of functioning of the Bretton Woods monetary system.
At the UN Monetary and Financial Conference in Bretton Woods (USA) in 1944, the third world monetary system was formalized. The Articles of Agreement (the Charter of the IMF) adopted at the conference determined the following principles of the Bretton Woods monetary system.
1. A gold exchange standard was introduced, based on gold and two reserve currencies - the US dollar and the pound sterling.
2. The Bretton Woods agreement provided for three forms of using gold as the basis of the world monetary system:
a) the gold parities of currencies were preserved and their fixation was introduced in the IMF;
b) gold continued to be used as an international means of payment and reserve;
c) in order to secure the status of the main reserve currency for the dollar, the US Treasury continued to exchange it for gold to foreign central banks and government agencies at the official price established in 1934, based on the gold content of its currency ($ 35 per 1 troy ounce, equal to 31.1035 g).
The introduction of mutual convertibility of currencies was envisaged. Currency restrictions were subject to gradual abolition, and their introduction required the consent of the IMF.
3. A regime of fixed currency parities and rates was established: the exchange rate could deviate from parity within narrow limits (±1% under the IMF Charter and ±0.75% under the European Monetary Agreement). To comply with the limits of currency fluctuations, central banks were required to conduct foreign exchange intervention in dollars. Devaluation over 10% was allowed only with the permission of the Fund.
4. For the first time in history, an international currency regulation body was created. The IMF provides loans to foreign exchange e to cover the deficit of balances of payments in order to support unstable currencies, monitors compliance by member countries with the principles of the world monetary system, and ensures monetary cooperation between countries.
International Monetary Fund, IMF (Eng. International Monetary Fund, IMF) is a specialized agency of the United Nations, headquartered in Washington, USA.
Under pressure from the United States within the framework of the Bretton Woods system, the dollar standard was established - a world monetary system based on the dominance of the dollar. The dollar - the only currency partially convertible into gold - has become the base of currency parities, the predominant means of international settlements, the currency of intervention and reserve assets. Thus, the United States established a monopoly currency hegemony, pushing aside its longtime rival - Great Britain. The pound sterling, although it was also assigned the role of a reserve currency due to historical tradition, became extremely unstable. The United States used the status of the dollar as a reserve currency to cover the deficit of its balance of payments with the national currency.
The United States entrusted its partners with the concern of maintaining fixed rates of their currencies against the dollar through foreign exchange intervention. The specificity of the dollar standard within the framework of the Bretton Woods system was to maintain the link between the dollar and gold.
The dominance of the United States in the Bretton Woods system was due to the new alignment of forces in the world economy. In 1949 the USA concentrated 54.6% of capitalist industrial production, 33% of exports, and almost 75% of gold reserves. Share stan Western Europe in industrial production fell from 38.3% in 1937 to 31% in 1948, in the export of goods - from 34.5 to 28%. The gold reserves of these countries decreased from 9 billion to 4 billion dollars, which was 6 times less than that of the United States (24.6 billion dollars), and their size fluctuated sharply across countries. Great Britain, serving with its currency 40% of international trade, had 4% of the world's gold reserves. It was only on the basis of the FRG's foreign economic expansion that its gold and foreign exchange reserves began to grow (from $28 million in 1951 to $2.6 billion in 1958).
The economic superiority of the United States and the weakness of its competitors led to the dominance of the dollar, which was in general demand. The dollar hegemony was also supported by the "dollar hunger" - an acute shortage of dollars caused by a deficit in the balance of payments, especially in settlements with the United States, and a lack of gold and foreign exchange reserves. It reflected in a concentrated form the heavy currency - economic situation countries of Western Europe and Japan.
Balance of payments deficit, depletion of official gold-currency reserves, "dollar hunger" led to increased foreign exchange restrictions in most countries, except for the United States, Canada, and Switzerland. Currency convertibility was limited. Import and export of currency without the permission of the authorities currency control were banned. The official exchange rate was artificial. Many countries of Latin America and Western Europe practiced a plurality of exchange rates - the differentiation of the exchange rate ratios of currencies by types of transactions, commodity groups and regions.
Due to the instability of the economy, the crisis of balance of payments, rising inflation, the exchange rates of Western European currencies against the dollar fell: the Italian lira by 33 times, the French franc by 20 times, the Finnish mark by 7 times, the Austrian shilling by 5 times, the Turkish lira by 2 times, the pound sterling by 80% for 1938 -1958. There were "exchange distortions" - a discrepancy between the market and official courses which resulted in numerous devaluations. Among them, a special place is occupied by the massive devaluation of currencies in 1949, which had a number of features.
1. This depreciation was a manifestation of a local currency crisis that arose under the influence of the world economic crisis, which in 1948-1949. struck mainly the United States and Canada and painfully affected the economy of Western Europe.
2. The devaluation of 1949 was carried out to a certain extent under pressure from the United States, which used the appreciation of the dollar to encourage the export of capital, buying cheap goods and enterprises in Western European countries and their colonies. With the revaluation of the dollar, the dollar debt of Western European countries increased, which increased their dependence on the United States. The appreciation of the dollar did not affect the exports of the United States, which occupied a monopoly position in world markets at that time.
3. The exchange rate of national currencies was lowered directly against the dollar, since, in accordance with the Bretton Woods agreement, fixed rates were established against the American currency, and some currencies did not have gold parities.
4. The devaluation was carried out in the conditions of currency restrictions.
5. Devaluation was massive; it covered the currencies of 37 countries, which accounted for 60-70% of world trade. Among them are Great Britain, the countries of the British Commonwealth, France, Italy, Belgium, the Netherlands, Sweden, West Germany, and Japan. Only the United States retained the gold content of the dollar, established during the devaluation in 1934, although its purchasing power was halved compared to the pre-war period.
6. The depreciation of currencies ranged from 12% (Belgian franc) to 30.5% (currencies of Great Britain, other countries of the sterling zone, the Netherlands, Switzerland, etc.).
The depreciation of currencies caused an increase in the cost of imports and an additional rise in prices. As a result of the devaluation of 1949, wholesale prices rose in September 1950 in Austria by 30%, in Great Britain and Finland by 19%, and in France by 14%. The consequence of the devaluations was the decline in the living standards of the working people.
The United States used the principles of the Bretton Woods monetary system (the status of the dollar as a reserve currency, fixed parities and exchange rates, the conversion of the dollar into gold, the understated official price of gold) to strengthen its position in the world. The countries of Western Europe and Japan were interested in undervaluing their currencies in order to encourage exports and restore the ruined economy. In this regard, the Bretton Woods system contributed to the growth of world trade and production for a quarter of a century. However, the post-war monetary system did not provide equal rights to all participants and allowed the US to influence the monetary policy of European countries, Japan and other members of the IMF.
3.Contradictions of the Bretton Woods monetary system.
The economic, energy, and commodity crises destabilized the Bretton Woods system in the 1960s. The change in the balance of power on the world stage has undermined its structural principles. Gradually weakened the economic superiority of the United States over its competitors. Western Europe and Japan, having strengthened their monetary and economic potential, began to push the American partner. In 1984, the Common Market countries accounted for 36.0% of the industrial production of the OECD countries (USA - 34%), 33.7% of exports (USA - 12.7%). Specific gravity The United States in gold reserves decreased from 75% in 1949 to 23%, while the EU countries - increased to 38%, foreign exchange - up to 53% (USA - 10.8%).
From American-centrism to polycentrism in the monetary sphere. The dollar gradually lost its monopoly position in foreign exchange relations. Brand of Germany, and since the beginning of the XXI century. euro, Swiss franc, Japanese yen compete with it in the currency markets, are used as an international means of payment and reserve. The economic and monetary dependence of the countries of Western Europe on the United States, which was characteristic of the post-war years, disappeared. A new world center has emerged in the form of the EU, competing with the US and Japan.
From "dollar hunger" to "dollar satiety". As the US uses the dollar to cover its balance of payments deficit, this has led to a huge increase in its short-term external debt in the form of dollar savings from foreign banks. "Dollar hunger" was replaced by "dollar satiety". The excess of dollars in the form of an avalanche of "hot" money periodically fell on one country, then on another, causing currency shocks and "flight" from the dollar.
The collapse of currency zones. During the Second World War and after it, currency zones were formed: sterling and dollar on the basis of the corresponding pre-war currency blocks, the zone of the French franc, Portuguese escudo, Spanish peseta, Dutch guilder. While retaining the main features of currency blocs, currency zones reflected new phenomena associated with the strengthening state regulation monetary and financial and trade relations between their participants.
Firstly, interstate agreements have acquired an important role in the design and functioning of currency zones, especially the zone of the French franc. For example, the Monetary Committee of the Franc Zone (a centralized governing body) has been coordinating the monetary and economic policy of this group since 1952. The monetary and economic policy of the sterling area was developed and coordinated by the Treasury and the Bank of England.
Secondly, unlike currency blocs, the internal mechanism of currency zones was characterized by a single monetary and financial regime, a single system of currency restrictions, a centralized pool of gold and foreign exchange reserves that were stored in the hegemonic country, and a preferential treatment of foreign exchange settlements within the grouping. The unification of the currency control of the countries participating in the currency area gave it an official character.
Thirdly, the international economic agreements of the members of the group were usually concluded by the country that led the zone. The mechanism of currency zones was directed against the expansion of foreign capital. As the colonial system was in crisis and political independence was gained by a number of countries, centrifugal tendencies intensified, which subsequently led to the collapse of the sterling, dollar and other zones and significant changes in the monetary and financial mechanism of the French franc zone, which, in connection with the introduction of the euro, was transformed into the African franc zone (June 2001).
The basic principles of its functioning have been changed. The CFA (African Financial Community) franc is pegged to the euro at a fixed rate of 1 euro = 655.95 francs. CFA. The guarantee of the convertibility of the CFA franc into the euro is provided by the EU as a whole, and not only by France. In May 2002, the principle of operating accounts was revised. These accounts accumulated up to 70% of the official foreign exchange reserves of the peripheral zone participants in the French treasury, and they ensured the convertibility of their currencies (now in euros) and international payments. The change in the monetary and financial mechanism is aimed at strengthening the influence of the EU in this regional currency grouping.
4.Prichiny collapse of the Bretton Woods monetary system.
Since the late 1960s, its structural principles, established in 1944, have ceased to correspond to the conditions of production, world trade and the changed balance of world forces. The essence of the crisis of the Bretton Woods system lies in the contradiction between the international nature of the IER and the consolidation of the status of reserve currencies for two national currencies subject to depreciation.
The causes of the crisis of the Bretton Woods monetary system can be represented as a chain of interdependent factors.
1. Instability and contradictions of the economy. The beginning of the currency crisis in 1967 coincided with a slowdown economic growth. The global cyclical crisis swept the economy of the West in 1969-1970, 1974-1975, 1979-1983.
2. Increased inflation had a negative impact on world prices and the competitiveness of firms and encouraged speculative transfers of "hot" money. Different inflation rates in countries affected the dynamics of the exchange rate, and the decrease in the purchasing power of money created conditions for "exchange distortions".
3. Instability of balances of payments. The chronic balance deficit of some countries (especially Great Britain, the USA) and the surplus of others (Germany, Japan) intensified the sharp fluctuations in the exchange rates, respectively, down and up.
4. The discrepancy between the principles of the Bretton Woods system and the changed balance of power on the world stage intensified as the economic positions of the USA and Great Britain weakened, which covered the deficit of their balance of payments with national currencies, abusing their status as reserve currencies. As a result, their stability was undermined.
The right of the owners of dollar holdings to exchange them for gold came into conflict with the ability of the United States to fulfill this obligation. Their external short-term debt increased by 8.5 times in 1949-1971, while official gold reserves decreased by 2.4 times. The consequence of the American policy of "deficit without tears" was the undermining of confidence in the dollar. Understated in the interests of the United States, the official price of gold, which served as the base for gold and currency parities, began to deviate sharply from the market price. Interstate regulation turned out to be powerless. As a result, artificial gold parities lost their meaning. This contradiction was exacerbated by the stubborn refusal of the United States until 1971 to devalue its currency. The regime of fixed parities and exchange rates exacerbated the "exchange distortions". In accordance with the Bretton Woods agreement, central banks were forced to carry out foreign exchange intervention to support the dollar, even to the detriment of national interests. Thus, the United States shifted to other countries the concern for maintaining the dollar exchange rate, which aggravated interstate contradictions.
Since the IMF Charter allowed only one-time devaluations and revaluations, in anticipation of them, the movement of “hot” money intensified, the speculative game to lower the rate of weak currencies and to increase the rate of strong currencies. Interstate currency regulation through the IMF turned out to be ineffective. Its loans were insufficient to cover the balance of payments deficit and support currencies.
The principle of Americanism, on which the Bretton Woods system was based, ceased to correspond to the new alignment of forces with the emergence of three world centers: the USA - Western Europe - Japan. The US use of the status of the dollar as a reserve currency to expand its foreign economic and military-political expansion, the export of inflation has increased interstate disagreements.
5. Activation of the Eurodollar market. Since the United States covers its balance of payments deficit with its national currency, some dollars are converted into foreign banks, contributing to the development of the Eurodollar market. This colossal market for dollars owned by non-residents ($750 billion or 80% of the euro market in 1981 versus $2 billion in 1960) played a twofold role in the development of the Bretton Woods crisis. At first, he supported the positions of the American currency, absorbing excess dollars, but in the 70s. eurodollar transactions, accelerating the spontaneous movement of "hot" money between countries, exacerbated the currency crisis.
6. The disruptive role of TNCs in the monetary sphere: TNCs have giant assets in different currencies, which are double the foreign exchange reserves of central banks, elude national control and engage in currency speculation on a grand scale.
In addition to the general ones, there were specific reasons inherent in the individual stages of the development of the crisis of the Bretton Woods system.
Forms of manifestation of the crisis of the Bretton Woods monetary system:
· "Currency fever" - the movement of "hot" money, the massive sale of unstable currencies in anticipation of their devaluation and buying up currencies - candidates for revaluation.
· "gold rush" - "flight" from unstable currencies to gold and a periodic increase in its price.
Panic on stock exchanges and falling stock prices in anticipation of changes in the exchange rate.
· Exacerbation of the problem of international monetary liquidity, especially its quality.
· Massive devaluations and revaluations of currencies.
· Active foreign exchange intervention of central banks, including collective ones.
· Sharp fluctuations in official gold and foreign exchange reserves.
· Using foreign loans and borrowings from the IMF to support currencies.
· Violation of the structural principles of the Bretton Woods system.
· Activation of national and interstate currency regulation.
· The strengthening of two trends in international economic and monetary relations - cooperation and contradictions, which periodically develop into trade and currency wars.
The currency crisis developed in waves, hitting one or the other country at different times and with different strengths. The development of this crisis can be conditionally divided into several stages.
Devaluation of the pound sterling. Due to the deterioration of the country's monetary and economic situation on November 18, 1967, the gold content and the pound sterling exchange rate were reduced by 14.3%. Following the UK, 25 countries, mostly trading partners, have devalued their currencies in varying proportions.
Gold rush, collapse of the gold pool, formation of a dual gold market. The owners of dollars began to sell them for gold. The volume of transactions in the London gold market increased from its usual value of 5-6 tons per day to 65-200 tons (1967), and the price of gold rose to 41 dollars from the official price of 35 dollars per ounce. The bouts of "gold rush" led to the collapse of the gold pool in March 1968 and the formation of a dual gold market.
devaluation of the French franc. The detonator of the currency crisis was currency speculation - a game to depreciate the franc and increase the rate of the German mark in anticipation of its revaluation. The advance of the mark on the franc was accompanied by Bonn's political pressure on Paris and the "flight" of capitalism from France, mainly to the FRG, which caused a reduction in the country's official gold and foreign exchange reserves ($6.6 billion in May 1968 to $2.6 billion in August 1969). ). Despite foreign exchange intervention by the Bank of France, the franc fell to the lowest acceptable limit. Turbulent political events in France, the resignation of Charles de Gaulle, the refusal of the FRG to revalue the mark increased pressure on the franc. On August 8, 1969, the gold content and the franc exchange rate were reduced by 11.1% (foreign exchange rates against the franc increased by 12.5%). At the same time, the currencies of 13 African countries - members of the franc zone - were devalued.
Revaluation of the German mark. On October 24, 1969, the mark was raised by 9.3% (from 4 marks to 3.66 marks per dollar). The revaluation was a concession from the FRG to international financial capital: it contributed to the improvement of the balance of payments of its partners, since their currencies were practically devalued. The outflow of "hot" money from Germany replenished the foreign exchange reserves of these countries. For 20 months, there was a relative calm in the currency markets, but the causes of the currency crisis were not eliminated.
The devaluation of the dollar in December 1971 The crisis of the Bretton Woods system culminated in the spring and summer of 1971, when the main reserve currency was at its epicenter. The dollar crisis coincided with the depression in the US after the economic crisis of 1969-1970. Under the influence of inflation, the purchasing power of 1971 compared to 1934. The total current account deficit in the US amounted to 71.7 billion dollars for 194% of 1971. The country's short-term external debt increased from $7.6 billion in 1949 to $64.3 billion in 1971, exceeding 6.3 times the official gold reserve, which declined over this period from $24.6 billion to $10.2 billion. billion dollars
The crisis of the American currency was expressed in the mass sale of it for gold and stable currencies, depreciation. Uncontrollably wandering Eurodollars flooded the currency markets of Western Europe and Japan. The central banks of these countries were forced to buy them to maintain their currencies within the limits set by the IMF. The dollar crisis caused a political form of speeches by countries (especially France) against the privileges of the United States, which covered the deficit of the balance of payments with the national currency. France exchanged $3.5 billion for gold in the US Treasury between 1967 and 1969. The convertibility of the dollar into gold became a fiction in 1970. The $50 billion holdings of non-residents were opposed by only $11 billion of US official gold reserves.
The United States took a series of measures to save the Bretton Woods system in the 1960s.
1. Borrowing in other countries. Dollar balances were partially converted into direct loans. Swap agreements ($2.3 billion in 1965, $11.3 billion in 1970) were signed between the Federal Reserve Bank of New York and a number of foreign central banks. Short-term Ruse bonds were placed in Western European countries.
2. Collective defense of the dollar. Under US pressure, the central banks of most countries refrained from exchanging their dollar reserves for gold at the US Treasury. The IMF has invested part of its gold reserves in dollars contrary to the Charter. Leading central banks created a gold pool (1962) to support the price of gold. And after the collapse, on March 17, 1968, a double gold market was introduced.
3. Doubling the capital of the IMF (up to 28 billion dollars) and a general agreement between 10 member countries of the Fund and Switzerland on loans to the fund (6 billion dollars), the issuance of SDRs in 1970 in order to cover the deficit of balances of payments.
The United States stubbornly resisted the overdue devaluation of the dollar and insisted on the revaluation of the currencies of its partners. In May 1971. the revaluation of the Swiss franc and the Austrian shilling was carried out, the floating exchange rate of the Federal Republic of Germany was introduced. Netherlands. which led to the actual depreciation of the dollar by 6-8%. The hidden devaluation suited the United States, since it did not affect the prestige of the reserve currency as detrimentally as the official one. To break the resistance of trade rivals, the United States switched to a policy of protectionism. On August 15, 1971, emergency measures were announced to save the dollar: the exchange of dollars for gold for foreign central banks was stopped (“gold embargo››), an additional 10% import duty was introduced. The United States embarked on the path of a trade and currency war. The influx of dollars into Western Europe and Japan caused a massive shift to floating exchange rates and a speculative attack on the dollar by their stronger currencies. Western Europe began to openly oppose the privileged position of the dollar in the world monetary system.
The search for a way out of the currency crisis ended with a compromise, the Washington agreement of the "Group of Ten" (at the Smithsonian Institution) on December 18, 1971. An agreement was reached on the following points: 1) devaluation of the dollar by 7.89% and an increase in the official price of gold by 8.57% (from 35 to 38 dollars per ounce); 2) revaluation of a number of currencies; 3) expanding the limits of exchange rate fluctuations from +_1 to +_2.25% and establishing central rates instead of currency parities; 4) cancellation of 10% customs duty in the USA. But the United States did not undertake to restore the convertibility of the dollar into gold and participate in foreign exchange intervention. The devaluation of the dollar set off a chain reaction: by the end of 1971, 96 of the 118 IMF member countries had set a new exchange rate against the dollar, with 50 currencies appreciated to varying degrees. . Taking into account the different degree of appreciation of the currencies of other countries and their share in US foreign trade, the weighted average value of the dollar devaluation was 10-12%.
The Washington Agreement temporarily smoothed over the contradictions, but did not eliminate them. In the summer of 1972, the floating rate of the pound sterling was introduced, which led to its devaluation by 6-8%. The UK was forced to compensate the owners of sterling assets and introduce a dollar, and from April 1974, a multi-currency clause as a guarantee of maintaining their value. Foreign exchange restrictions were tightened to curb the "flight" of capital abroad. The pound sterling actually lost the status of a reserve currency.
In February - March 1973, the currency crisis hit the dollar again. The impetus was the instability of the Italian lira, which led to the introduction in Italy of a double foreign exchange market(from January 22, 1973 to March 22, 1974) following the example of Belgium and France. The "gold rush" and the increase in the market price of gold once again exposed the weakness of the dollar. However, unlike in 1971, the United States failed to achieve revaluation of the currencies of Western Europe and Japan. On February 12, 1973, the dollar was again devalued by 10% and the official price of gold was raised by 11.1% (from $38 to $42.22). The massive sale of dollars led to the closure of the leading foreign exchange markets (from 2 to 19 March). Transition to floating exchange rates from March 1973. Corrected "exchange distortions" and relieved tension in the currency markets.
Six countries of the Common Market have abolished the external limits of the agreed fluctuations of their currencies (the “tunnel”) against the dollar and other currencies. Detachment of the “European snake currency” from the dollar led to the emergence of a kind of currency zone, headed by the German mark. This testified to the formation of a Western European zone of monetary stability as opposed to an unstable dollar, which accelerated the collapse of the Bretton Woods system.
Conclusion.
In conclusion, I would like to note the features and socio-economic consequences of the crisis of the Bretton Woods monetary system, since between the currency crises of 1929-4933. and 1967-1976 there is a certain similarity. These structural crises of the world currency system swept all countries, took on a protracted nature and led to a violation of its principles.
However, the crisis of the Bretton Woods system has a number of features:
1. Interweaving of cyclical and non-cyclical currency crises. The crisis of the Bretton Woods monetary system was combined not only with global economic crises, but also with periodic revival and economic recovery.
2. The active role of TNCs in the development of the currency crisis. Large foreign exchange assets and the scale of Eurocurrency, especially Eurodollar, operations of TNCs gave the crisis of the Bretton Woods system an enormous scope and depth.
4. Disorganizing role of the USA. Using the privileged position of the dollar as a reserve currency to cover the deficit of its balance of payments, the United States flooded the countries of Western Europe and Japan with dollars, causing disruptions in their economies, increased inflation, and currency instability, which deepened interstate contradictions.
5. The emergence of three centers of power. The structural principles of the Bretton Woods system, established during the period of the undivided master of the United States, no longer correspond to the new alignment of forces in the world. The EU has created a counterweight to the hegemony of the dollar, and Japan uses the yen as an international means of payment and reserve in the Asia-Pacific region.
6. Wave-like development of the currency crisis, as evidenced by the considered stages of its development.
7. Massive devaluations and periodic currency revaluations. Comparison of devaluations in the 60s and 70s and 1949 allows us to identify their differences in the following indicators:
a) scale: in 1967-1973. repeated devaluations involved hundreds of currencies (against 37 in 1949), including reserve currencies: the pound sterling and double the dollar;
b) size: in the 60-70s. the size of devaluations (8-15% on average) were significantly less than in 1949 (up to 30.5%) and after the First World War (up to 80%). The predominance of small devaluations without a margin of safety is due to the fear of countries to cause a chain reaction due to the increased internationalization and globalization of economic ties;
c) duration: in the 60-70s. devaluations dragged on for a number of years, as in the 1930s, and in 1949 this event was carried out almost simultaneously in 37 countries;
d) procedure for carrying out: devaluations are carried out not only legally, but also in fact on the market in conditions of floating exchange rates. And in 1949, the regime of fixed exchange rates dominated and devaluations were carried out officially.
8. Structural nature of the crisis of the world monetary system. Its structural principles were canceled: the exchange of dollars for gold was stopped. The official price of gold and gold parities were abolished, a floating exchange rate regime was introduced, the dollar and pound sterling officially lost the status of reserve currencies.
9. Influence of state and interstate currency regulation. On the one hand, it contributes to the aggravation of contradictions, and on the other, to mitigating the consequences of the currency crisis and finding a way out of it through currency reform.
The currency crisis, disorganizing the economy, hindering foreign trade, increasing the instability of currencies, generates severe socio-economic consequences. This is manifested in an increase in unemployment, a freeze wages, rising inflation. Revaluation is accompanied by a decrease in employment in export industries, and devaluation, by increasing the cost of imports, contributes to an increase in prices in the country. Currency stabilization programs ultimately come down to austerity at the expense of workers and the orientation of production to export. The centrifugal trend, reflecting interstate disagreements, is opposed by the trend towards monetary cooperation.
Bibliography
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2. Working programm, guidelines and assignments for control work according to the “World Monetary System” kus - St. Petersburg: Publishing House of St. Petersburg State University of Economics, 2006.-14s
3. International monetary and financial relations. Textbook. Edited by L.N. Krasavina. 3rd ed., revised. T added. 2005, 485pp.
4. Money and credit in market economy. Ed. V. I. Kolesnikov and G. N. Beloglazova. - St. Petersburg: Publishing house of St. Petersburg University of Economics, 2004
5. International monetary and financial relations: Textbook / Ed. L.N.Krasavina. - M.: Finance and statistics, 2004. - 592 p.: ill.
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From Wikipedia, the free encyclopedia. http://en.wikipedia.org
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Page 67-International monetary and financial relations. Textbook. Edited by L.N. Krasavina. 3rd ed., revised. T added. 2005, 485str
From Wikipedia, the free encyclopedia. http://en.wikipedia.org
Page 70-International monetary and financial relations. Textbook. Edited by L.N. Krasavina. 3rd ed., revised. T added. 2005, 485str
Str78-International monetary and financial relations. Textbook. Edited by L.N. Krasavina. 3rd ed., revised. T added. 2005, 485str
It was established in 1944. Its name is associated with the place where the conference was held, the city of Bretton Woods. Representatives of different countries concluded that it is advisable to make certain adjustments to the existing way of life. They also organized it as a regulatory body responsible for implementing the main provisions of the system.
The international monetary system is a set of relations that have developed as a result of the implementation of credit, settlement and other operations for the purchase and sale of goods between representatives of different countries. The introduction of the new system was carried out with the aim of establishing a sustainable, it was planned to ensure the elasticity of its change by reducing the importance of the gold standard.
Bretton Woods is characterized by the following basic principles:
It was assumed that the Central Bank would regulate the exchange rate within the country. In the event of an unfavorable situation, for example, an increase in the exchange rate of the unit of account to an unacceptable limit, he released to the market a large number of currency, thereby reducing the demand for it. And accordingly, the reverse situation was observed when it was reduced.
When the Bretton Woods conference was held, the main idea was to provide the state with the opportunity to independently adapt in the face of rapidly changing exchange rates. This role was previously performed by the gold standard. However, as practice has shown, the effectiveness of this position was short-lived, because since 1950 there has been an active development of a crisis situation on the world stage.
Thus, when on financial market the exchange rate rose sharply, the government chose one of two acceptable options for resolving such a situation: either rely on performance or introduce a new fixed exchange rate. If preference was given to the second method, then there was a need to change financial policy, which would prevent the recurrence of an unfavorable event in the future. As a rule, faced with such a problem, the state did not dare to make a specific choice in the direction of one or another option. After all, any action could lead to a significant increase in the number of unemployed in the country, for which the government was not ready.
The Bretton Woods monetary system was based on a change in the exchange rate of monetary units, while the exchange rate for gold remained at the same level throughout the entire period of the system's operation. This indicates the irrational use of existing advantages, since the gold reserve is considered a reliable support, because its value is not lost over time.
So, the Bretton Woods monetary system operated in the IMF member countries for about thirty years and did not bring the expected results. This is due to a significant contradiction, which was laid down at the time of its organization. The whole system was built on the foundation of the strength of the US dollar and the stabilization of other currencies in relation to it. However, a stable exchange rate could only be achieved by weakening the base currency, that is, the US dollar. The collapse of the system occurred as a result of the active development of inflation at the international level.
Bretton Woods Conference 1944.
Following the results of the Second World War, the dollar became the main currency of the planet due to the monopoly right to exchange for gold.
72 years ago, on July 1, 1944, a fundamental change in the world economy began, fixed in the agreements a few days later. However, the understanding of what happened came to ordinary people much later.
The world of finance has always been something like a mixture of balancing act with the magic of circus magicians. Most of its basic concepts are difficult to understand not only by ear, but also completely conditional in nature. At the same time, finance is inextricably linked with money, and money has always been an instrument of power. It is not surprising that with their help, for many centuries, someone has constantly tried to take over the world.
So, for example, in July 1944, at the Mount Washington Hotel in the resort town of Bretton Woods (New Hampshire, USA), a group of gentlemen held a conference, which resulted in the world financial system of the same name, which marked America's final victory over its long-standing geopolitical world rival - Great Britain. The winner got the rest of the world - more precisely, almost the whole, since the Soviet Union join new system refused. However, for the United States, it has become only an intermediate step towards global financial hegemony, which America has managed to achieve, but, apparently, it is not destined to stay on Olympus.
Stages of a long journey
Transfer from subsistence farming to machine production, among other things, caused a massive increase in labor productivity, thereby creating significant commodity surpluses that local markets could no longer absorb. This prompted countries to expand foreign trade. So, for example, in 1800–1860, the average annual volume of Russian exports increased from 60 million to 230 million rubles, and imports - from 40 million to 210 million. But Russian empire ranked first in international trade. The leading positions belonged to Great Britain, France, Germany and the USA.
Such a large-scale exchange of goods could no longer fit within the narrow framework of a subsistence economy and required the widespread use of a common denominator in the form of money. This also gave rise to the problem of comparing their value with each other, which ultimately led to the recognition of gold as the universal equivalent of value. Gold has played the role of money for centuries, everyone had it" major players”, from which a coin was traditionally minted. But something else was more important. International trade has realized the need not only for a mechanism for the predictability of the value of money, but also the importance of the stability of the ratio of their value to each other.
Using the peg of national currencies to gold made it very easy to solve both problems at once. Your wrapper is "worth", say, one ounce (31.1 g) of gold, mine is two ounces, therefore, my wrapper is "equal" to two of yours. By 1867, this system had finally taken shape and was consolidated at a conference of industrial developed countries in Paris. Great Britain was the leading world trading power of that time, therefore the stable rate of 4.248 British pounds per ounce established by it became a kind of foundation for the world financial system. Other currencies were also denominated in gold, but, yielding to the pound in the size of the share of world trade, eventually came to their expression through the British pound.
However, even then the United States began its own game to overthrow the British currency hegemony. Under the Paris Monetary System, the United States achieved not only fixing the dollar against gold ($20.672 per ounce), but also fixed the rule that free trade in gold could only take place in two places: London and New York. And nowhere else. This is how the gold monetary parity developed: 4.866 US dollars per British pound. The rates of other currencies had the right to fluctuate only within the framework of the cost of sending the amount of gold, equivalent to one unit of foreign currency, between the gold sites of Great Britain and the USA. If they went beyond the boundaries of this corridor, an outflow of gold from the country began, or, conversely, its inflow, which was determined by the negative or positive balance of the national balance of payments. Thus, the system quickly returned to equilibrium.
In this form, the "gold standard" existed until the outbreak of the First World War and, on the whole, ensured the effectiveness of the mechanism international finance. Although even then Great Britain faced the problem of the cyclical expansion-contraction of the money supply, which was fraught with the depletion of the national gold reserve.
The Great War, as the First World War was then called, greatly shook world economy which could not but affect its financial system. London could no longer serve as the world's reserve currency alone. The scale of the domestic economy simply did not generate enough gold to meet other countries' demand for British pounds, and Britain's own trade balance remained negative. This meant the virtual bankruptcy of the British lion, but the gentlemen from the City took a deft step and at the international economic conference in Genoa in 1922 proposed a new standard, called the gold exchange standard. Formally, it almost did not differ from the Paris "gold", unless the dollar was already officially recognized as an international measure of value on a par with gold. Then a little scam began. The dollar retained its gold backing, and the pound remained firmly pegged to the dollar, although it was no longer possible to exchange it for the corresponding gold equivalent.
I will lead the parade
However, the Genoese monetary system did not last long. Already in 1931, Great Britain was forced to officially cancel the convertibility of the pound into gold, and the Great Depression forced America to revise the gold content of its currency from 20.65 to 35 dollars per ounce. The United States, which by that time had a positive trade balance, began active expansion into Europe. To protect against it, Britain and other leading countries have introduced prohibitive customs tariffs and direct restrictions on imports. The volume of international trade and, accordingly, mutual settlements fell sharply. The exchange of currency for gold in all countries was stopped, and by 1937 the world monetary system ceased to exist.
Unfortunately, before her death, she managed to lead the US banking circles to the idea of the possibility of seizing complete leadership in the world economy through the dollar gaining the status of the only reserve system. And the Second World War, which devastated Europe, came in handy here. If Hitler did not exist, he would have been invented in Washington.
So when on July 1, 1944, representatives of 44 countries, including the USSR, gathered at the Bretton Woods conference to resolve the issue of the financial structure of the post-war world, the United States proposed a system that was at the same time very similar to the one that “worked well before”, and at the same time leading the world to official recognition of America's leading role. In short, she looked simple and elegant. The US dollar is firmly tied to gold (the same $35 per troy ounce, or 0.88571 grams per dollar). All other currencies fix rates against the dollar and can change them no more than plus or minus 0.75% of this value. Apart from the dollar and the pound, none world currency did not have the right to exchange for gold.
In fact, the dollar became the only world reserve currency. The British pound retained some privileged status, but by that time more than 70% of the world's gold reserves were in the United States (21,800 tons), the dollar was used in more than 60% of international trade settlements, and Washington promised huge loans in exchange for the ratification of the Bretton Woods terms. for economic recovery after the war. So, the Soviet Union was offered to allocate 6 billion dollars, which was a huge amount, since the entire amount of Lend-Lease was estimated at 11 billion. However, Stalin correctly assessed the consequences and prudently refused the offer: the Soviet Union signed the Bretton Woods agreements, but so did they did not ratify.
The governments of other European countries actually signed a bondage and, with the ratification of the Bretton Woods conditions, could issue exactly as much of their own money as their central banks had the world's reserve currency - US dollars. This provided the United States with the broadest possible control over the entire world economy. This also allowed them to establish the International Monetary Fund, the World Bank and GATT - the General Agreement on Tariffs and Trade, later transformed into the World Trade Organization (WTO).
The world began to live according to the Bretton Woods system (BWS).
french demarche
With all the elegance of the idea and the huge prospects for the United States, the UA itself contained fundamental problems that manifested themselves even in the days of the “gold standard”. While the US economy was about a third of the world, and if you subtract the socialist countries, then 60% of the total economy of the West, the share of dollars issued for lending to foreign financial systems was significantly less than the money supply circulating within the United States itself. The balance of payments was positive, thus enabling America to continue to grow rich. But as the European economy recovered, the share of the United States began to decline, and American capital, taking advantage of the high cost of the dollar, began to actively flow abroad to buy up cheap foreign assets. In addition, the profitability of foreign investments was three times higher than the profitability of the American market, which further stimulated the outflow of capital from the United States. America's trade balance gradually turned negative.
The strict restrictions on gold trading that existed in the BVS did not help either, effectively limiting its purchase even by the central banks of other states, and depriving any private investors of such an opportunity altogether. In addition, the emerging transnational corporations used their foreign capital for an active exchange game, including “against the dollar”. The growing imbalance between the theoretical model of the BVS and the actual state of affairs in the world economy has not only led to the emergence of a black market for gold, but also brought its price there to more than 60 dollars per troy ounce, that is, twice as high as the official one.
It is clear that such a discrepancy could not continue for a long time. It is believed that the BVS was broken by French President General de Gaulle, who collected the "ship of dollars" and presented it to the United States for immediate exchange for gold. This one really took place. At a meeting with President Lyndon Johnson in 1965, de Gaulle announced that France had amassed 1.5 billion paper dollars, which it intended to exchange for the yellow metal at the official rate of $35 an ounce. According to the rules, the US had to transfer more than 1,300 tons of gold to the French. Considering that by this time no one knew the exact size of the US gold reserves, but there were persistent rumors about its reduction to 9 thousand tons, and the cost of the entire mass of printed dollars clearly exceeded the equivalent of even the official number of 21 thousand tons, America would agree to such an exchange could not. Nevertheless, through strong pressure (for example, the country withdrew from the NATO military organization), France managed to overcome Washington's resistance and in two years, together with Germany, thus export more than 3 thousand tons of gold from the United States.
This is where the story of the Bretton Woods financial system ended, because after such an embarrassment, the United States, under various pretexts, refused to exchange green papers for real gold. On August 15, 1971, the next US president, Richard Nixon, officially abolished the gold backing of the dollar.
Over the 27 years of its existence, the BVS has done the main thing - it has elevated the US dollar to the top of world finance and has firmly associated it with the concept of independent value. That is, the value of this piece of paper was given only by what was written on it - “dollar”, and not by the amount of gold for which it could be exchanged. The rejection of the gold backing removed the last restrictions on US money issue. Now the Fed could officially decide at its meeting how many dollars the world needs, without worrying about any kind of provision for them. And the oil crisis that broke out in 1973 made it possible to agree with the monarchies of the Middle East on the transfer of all oil trade only to US dollars. All courses became floating, and the new system was called Jamaican and secured by intergovernmental agreements of 1976-1978.
Formally, the Jamaican system exists to this day, but in fact we can see the beginning of its end. Because it contains even more systemic contradictions than it was at Bretton Woods, but it no longer contains gold that can even be felt and counted.
Currency market
Currency market- this is a certain way organized set of relations for the sale and purchase of the currency of one country for the currency of another country or securities in foreign currency.
In the foreign exchange market of the country, specific participants in the foreign exchange market work. These include: authorized banks, various investment companies, currency exchanges, brokerage houses, foreign monetary and financial organizations.
Authorized banks in the Russian Federation- this is commercial banks who have received licenses from the Central Bank of Russia to conduct operations with foreign currency.
The Russian foreign exchange market can be divided into exchange and over-the-counter (or interbank).
Exchange currency market belongs to the category of organized markets. At the same time, currency trading is carried out on currency exchanges. The role of currency exchanges also lies in the fact that they carry out the quotation of currencies, the exchange rate of the ruble against foreign currencies is formed.
On the interbank foreign exchange market currency transactions are made by authorized banks both among themselves and with their clients who have currency accounts in these banks.
Features of the foreign exchange market:
u The international character of currency markets based on the globalization of world economic relations, the widespread use of electronic means of communication for transactions and settlements.
u The continuous, non-stop nature of transactions during the day, alternately in all parts of the world.
u Unified nature of foreign exchange transactions.
u The use of operations in the foreign exchange market for the purposes of protection against foreign exchange and credit risks through hedging.
u A huge proportion of speculative and arbitrage transactions, which are many times greater than foreign exchange transactions associated with commercial transactions. The number of currency speculators has increased dramatically and includes not only banks and financial and industrial groups, TNCs, but also many other participants, including individuals and legal entities.
Volatility of exchange rates, which does not always depend on fundamental economic factors The modern foreign exchange market performs the following functions:
u Ensuring the timeliness of international settlements.
u Creating opportunities to protect against currency and credit risks.
u Ensuring the interconnection of world currency, credit and financial markets.
u Creation of opportunities for the diversification of foreign exchange reserves of the state, banks and enterprises.
u Market regulation of exchange rates based on the interaction of demand and supply of currencies.
u The possibility of implementing monetary policy as part of the state economic policy. The possibility of implementing coordinated actions of different states in order to achieve the goals macroeconomic policy within the framework of interstate agreements.
u Providing opportunities for foreign exchange market participants to receive speculative profits through arbitrage transactions.
4. Types of participants in the foreign exchange market
Buyers and sellers - a general distinction between participants in the foreign exchange market. Buyers are carriers of demand for currency, sellers are carriers of its supply. If we take into account that the exchange in the foreign exchange market is of a direct nature, the roles of the buyer and seller on it do not differ in time. The buyer here acts simultaneously as a seller.
Buyers and sellers in the foreign exchange market differ in terms of their civil status on physical and legal persons. In the currency legislation, both receive certainty residents and non-residents, the content of which will be revealed later.
For the most part legal entities institutionally issued, i.e. act as a specific type of organization. These organizations are primarily banks . They are the main subjects of monetary relations, the largest buyers and sellers of currency. Therefore, they can be considered the main participants in the foreign exchange market.
Many countries of the world, including Russia, have a two-level banking system, which is made up of a state banking institution ( central bank) and commercial banks. The Central Bank, being a participant in the foreign exchange market, performs special functions related to its regulation. In Russia, not all commercial banks have the right to make foreign exchange transactions, i. be subjects of the foreign exchange market, but only those who have a special license from the Central Bank of the Russian Federation. These commercial banks are called authorized banks .
One of the main participants in the world currency market are international banking institutions and international financial institutions.
Banks often use currency exchange , buy and sell currency through this intermediary. The currency exchange is one of the leading institutions of the foreign exchange market.
They also play an important role in the foreign exchange market. exporters , whose activity is one of the important sources of foreign currency inflow to the domestic foreign exchange market, importing firms providing the main demand for foreign currency, international monetary and financial organizations, having a regulatory impact on the functioning of regional and world currency markets.
The modern foreign exchange market is distinguished by the presence of such participants as brokerage houses and consulting firms . These are intermediaries that provide services for buying and selling currencies, consulting services that make forecasts regarding the dynamics of the foreign exchange market and sell relevant information, etc.
The institutions of the foreign exchange market carry out their activities in close cooperation with each other. Their organized totality is system institutions of the foreign exchange market, the core of which is the bank. The effective functioning of this system is ensured in the presence of certain conditions that make it up. infrastructure . The elements of the infrastructure of the foreign exchange market include means of communication and communication, a network of exchange offices serving the population, educational institutions that train relevant specialists, etc.
As already noted, currency risks are an integral element of the functioning of the foreign exchange market. Moreover, different categories of foreign exchange market participants treat them differently. Depending on this relationship, they act as entrepreneurs (investors), players (speculators) and hedgers .
Entrepreneurs, becoming participants in the foreign exchange market during commercial transactions, are interested in minimizing foreign exchange risks in order to avoid additional losses. Investors, investing in various assets, pursue similar goals.
For players (speculators), on the contrary, high currency risks are a necessary condition for obtaining high profits from transactions in the market. Therefore, high risks are often deliberately provoked.
Hedgers are a special kind of currency market participants. The main purpose of their activities is to carry out special operations aimed at protecting (hedging) financial activities from adverse changes in the dynamics of exchange rates.
The modern world currency market, despite the difficulties, contradictions and crisis situations, largely due to the weakening of the dollar, is developing relatively dynamically. The most tangible impact on this process is exerted by the globalization of the world economy. It leads to an even closer interweaving of national currency markets, and hence to their interdependence. As a result, certain changes in one of the trading centers affect the state of the world currency market as a whole. A factor that favorably affects the consolidation of national currency markets has been the liberalization in many countries currency legislation and weakening state influence on the monetary sphere.
characteristic feature modern world currency market is its regionalization. At the center of the processes associated with it are the leading world currencies: the US dollar (North and South America), the yen (the Far East and Southeast Asia), and the euro. The functioning of the regional segments of the world currency market occurs with varying degrees of stability. The most stable is the European monetary system. The least stability is characteristic of the functioning of the Asian foreign exchange market, which experienced deep crisis shocks in the late 1990s.
So, the foreign exchange market is the main form of functioning of foreign exchange relations. It has a complex structure and a mechanism that makes it possible to coordinate the interests of its various participants, the main of which are banks.
5.Currency system is a form of organization and regulation of currency relations, which operates on the basis of national legislation and taking into account international agreements.
The elements of the monetary system are
u funds used as settlement or payment and settlement;
u bodies exercising currency regulation and control;
u conditions and mechanisms of currency convertibility;
u definition mode exchange rate;
u rules for international settlements;
u the mode of operation of precious metals markets;
u rules for obtaining and using credit funds in foreign currencies;
u mechanisms of currency restrictions.
u World Monetary System (MWS)- this is a global form of organization of monetary relations within the framework of the world economy, fixed by multilateral interstate agreements and regulated by international monetary and credit financial institutions. MVS includes currency relations and the currency mechanism.
u Currency relations called the set of monetary relations that determine payment and settlement transactions between national economies.
u currency mechanism represents the legal norms and the instruments representing them both at the national and international levels.
u The following should be noted as the main functions of the AIM:
As main functions of AIM the following should be noted:
u mediation of international economic relations;
u ensuring payment and settlement turnover within the world economy;
u providing the necessary conditions for a normal reproductive process;
u regulation and coordination of regimes of national currency systems;
u unification and standardization of the principles of currency relations
The main elements of the world monetary system:
u Reserve currencies and international currency units;
u Conditions of mutual convertibility of currencies;
u Regulation of exchange rate regimes;
u Interstate regulation of currency restrictions;
u Unification of forms of international payments and credit funds;
u Regime of world currency markets and gold markets;
u International Monetary Organizations, etc.
u There are the following stages in the formation of the MVS:
u 1. Parisian monetary system (from 1867 to the 1920s);
u 2. Genoese monetary system (from 1922 to the 1930s);
u 3. Bretton Woods monetary system (from 1944 to 1976);
u The main principles of the gold coin standard were the following:
u 1) the gold content of national monetary units is established;
u 2) gold performed the function of world money;
u 3) banknotes were freely exchanged for gold;
u 4) the exchange rate could deviate from monetary parities within the "gold dots";
u 5) reserve currency - British pound sterling;
u 6) a rigid ratio was maintained between the national gold reserve and the domestic money supply;
u 7) the balance of payments deficit was covered by gold.
paris currency system
Based on the gold coin standard and legally fixed by an interstate agreement in 1867 at a conference of industrialized countries in Paris. It is characterized by a fixed gold content of national currencies and fixed exchange rates.
In 1837, the gold content of the dollar was officially fixed by setting the official price of gold at $20.672 per troy ounce (31.1 g).
The British government fixed the official price of gold at £4.248. Art. per ounce. The ratio of the price of gold, expressed in dollars and in pounds sterling, made it possible to determine the exchange rate: 20.672 dollars / 4.248 pounds. Art. = 4.866, i.e. for 1 pound they gave 4.866 dollars. This ratio was called monetary parity.
Exchange rates could fluctuate around the monetary parity within gold points for the amount of the cost of sending gold, the equivalent of one unit of foreign currency, between the monetary centers of Great Britain and the United States. An exchange rate of approximately $4,911 was called the gold point of exports, and a rate of approximately $4,861 was called the gold point of imports. Within the gold points, the exchange rate was determined on the basis of supply and demand. If, as a result of depreciation, the exchange rate went beyond the gold points, then the outflow of gold from the country began, and the rate returned to its original place. As a result of the outflow of gold, there was a negative balance of payments, and as a result of the inflow, a positive balance.
The balance of payments deficit was to be covered by gold. But since the gold reserves of countries were limited, then any imbalances had to be corrected and could lead to the depletion of official gold reserves. Therefore, during the period of imbalances in international settlements, in practice, not the transportation of gold from country to country, but the mechanism of the overflow of short-term capital by maneuvering interest rates was often used. Thus, in Great Britain, which experienced a deficit in the balance of payments at the beginning of the 20th century, there was a reduction in the money supply, as a result of which interest rates and the inflow of short-term capital from abroad increased, which made it possible to finance the balance of payments deficit. The existence of the gold standard until the First World War not only gave stability to this monetary system, but also underlay the sustainable development of the economies of the countries that were part of it.
Basic principles of the functioning of the Paris Monetary System:
u currency units of countries had a gold content;
u the convertibility of each currency into gold was ensured both inside and outside the borders of an individual state;
u gold bars could be freely exchanged for coins, and gold was freely exported and imported, sold for international markets gold;
u maintaining a rigid ratio between the country's gold reserves and the domestic money supply.
Genoese monetary system
It was formalized in 1922 at the Genoa International Economic Conference; was based on the gold standard. The British pound sterling and the American dollar competed for leadership in the global foreign exchange market as a reserve currency. Exchange rates could fluctuate around the monetary parity within gold points for the amount of the cost of sending gold, the equivalent of one unit of foreign currency, between the monetary centers of Great Britain and the United States.
Britain's attempts to restore the gold standard were unsuccessful: as a result of the overvaluation of the pound sterling, the balance of payments deficit increased. Great Britain was forced to cancel in 1931 the convertibility of the pound into gold. This measure, against the backdrop of the Great Depression in the late 1920s and early 1930s, became a manifestation of the world currency crisis, the way out of which countries saw in the devaluation of their currencies.
The devaluation of the dollar by increasing the cost of an ounce of gold from 20.65 to 35 dollars in 1933, the United States, which had a positive balance of payments, was used as a measure to promote their exports and create additional jobs in export industries, reduce unemployment.
Against this background, countries, defending themselves from foreign competition, were forced to start introducing high customs duties and import tariffs. The result of these measures was a reduction in foreign trade and international payments.
As a result, the Genoese monetary system lost its elasticity and stability. The exchange of banknotes for gold in the internal circulation of all countries was stopped, and only the external convertibility of currencies into gold was preserved under the agreement of the central banks of the USA, Great Britain and France. Another shock to the world monetary system was economic crisis 1937, which caused a new wave of currency depreciation. By the beginning of World War II, there was not a single stable currency left.
Basic principles of functioning of the Genoese monetary system:
u gold retained the function of final monetary settlements between countries;
u The American dollar became the reserve currency, which, along with gold, was recognized as a measure of the value of the currency of different countries, as well as an international credit means of payment;
u The dollar was exchanged for gold by central banks and government agencies of other countries in the US Treasury at a fixed rate. Government bodies and individuals could purchase gold on the private market. The currency price of gold was formed on the basis of the official one;
u Equalization of currencies to each other and their mutual exchange was carried out on the basis of official currency parities, expressed in gold and dollars;
u each country had to maintain a stable exchange rate of its currency against any other currency;
u a new element of the world monetary system was currency regulation, which was carried out in the form of an active monetary policy, international conferences and meetings.
Jamaican currency system
At the end of the 70s, a group of 12 Western European states of the European Economic Community (Common Market) joined forces in the currency area in order to protect their economies from currency crises and actively influence the United States on solving international currency problems, as well as to get rid of the need to constantly provide support for the US dollar. Was formed EMS- a currency mechanism that allows to reduce fluctuations in the exchange rates of the participating countries and contributes to the formation in Europe of a zone of currency stability and assistance economic integration European countries. On the basis of this system, from January 1, 2002, on the territory of the states that are members of the European Union (EU), Single pan-European currency unit(Unified All-European Monetary Unit, EURO) - as a means of achieving their full economic and political integration.
Modern stage in the development of the world monetary system is associated with the decision of the meeting of the member countries of the International Monetary Fund in Kingston (Jamaica, 1976). Jamaican currency system- a modern international monetary system based not on the monetary systems of individual countries (including the United States), but on legislatively enshrined interstate principles, in particular, on the principle of a complete rejection of the gold standard.
This means: the abolition of the official price of gold and gold parities, the permission to sell and buy gold at market prices, the right for countries to choose any exchange rate regime.
In the conditions of instability of national currencies of different countries in the 70s, a new type of international means of payment was introduced - SDR (Special drawing rights), a conventional monetary unit that began to be used for non-cash international settlements by recording on special accounts and as the unit of account of the IMF. SDR began to perform a number of functions of world money: to regulate the balance of payments; replenishment of official foreign exchange reserves; comparison of the value of national currencies.
SDR has no intrinsic value and no real collateral. The SDR rate is determined based on the weighted average rate of a set of currencies, the so-called - currency basket, including, for example, in 2005: US dollar - 45%; pound sterling - 11%; euro - 29%; Japanese yen - 15%.
Principles of the Jamaican Monetary System:
1. Transition of the gold exchange standard to a multicurrency market standard. The SDR standard was officially introduced. The SDR was declared the base of the Jamaican monetary system and the basis of currency parities.
2. The demonetization of gold was legally completed, which was expressed in the abolition of the official fixed price for gold, the introduction of a floating market rate of gold, which is determined at exchange auctions, the abolition of gold parities, and the termination of the exchange of dollars for gold.
Demonetization of gold - the transformation of gold from financial asset into a commodity that is no longer used as a means of payment between the central banks of countries, but enters the sphere of commodity circulation.
10. EUROPEAN MONETARY SYSTEM (EMS). Created in 1979 to maintain monetary stability, ensure Europe's progress towards economic integration, and prevent trade disruptions due to exchange rate fluctuations.
The creation of the European Monetary System (EMS) was to lead to the creation of a full-fledged exchange rate mechanism, on the basis of which the European Monetary Fund (or European Central Bank) would arise. Ultimately, the European Monetary Fund will replace the European Monetary Cooperation Fund and manage the total foreign exchange reserves of the EMU member countries by intervening in the foreign exchange markets and building reserves in European currency units (ECUs) that will act as European SDRs. It was assumed that in cases where the domestic policy of individual countries began to threaten the stability of exchange rates, countries with a strong currency would resort to monetary expansion, while countries with a weak currency, on the contrary, would try to "compress" credit and the money supply in circulation. From the states that agreed to become members of the EMU, it was required to limit mutual exchange rate fluctuations of 2.25% in one direction or another (for countries in a difficult financial situation - 6% for a transitional period). Initially, eight of the nine countries of the European Economic Community became members of the EBU, and only the UK decided not to participate in the single exchange rate mechanism.
In connection with the differences in inflation rates between EMU member countries that persisted throughout the first half of the 1980s, there was a need to revise exchange rates from time to time. Between 1979 and January 1987 these courses were revised eleven times; The twelfth revision took place on January 8, 1990, when the Italian lira's wider exchange rate band was replaced by the EMU's standard narrow band. The EMU has evolved as a combination of fixed and adjustable exchange rate regimes. During periods of stability, countries have enjoyed many of the benefits of fixed exchange rates, and revisions and adjustments to exchange rates have addressed the challenges of maintaining competitiveness. However, periods of currency stability punctuated by repricing may have occurred only because capital controls effectively insulated central bank reserves from attacks by currency speculators in anticipation of the next repricing. In the first ten years of the EMU's existence, the governing national monetary and monetary institutions retained limited political autonomy. However, by July 1, 1990, most of the EMU member states had abandoned foreign exchange and capital controls, and the problem of an “incompatible quartet” of political goals immediately arose: free trade, freedom of capital movement, the stability of fixed (managed) exchange rates and independent monetary policy. So Spain, the UK and Portugal entered the EMU exchange rate mechanism just at the moment when the system as a whole became very vulnerable, although it looked more stable. The strategy of abandoning exchange rate revisions and foreign exchange controls, as well as capital controls, seemed successful for some time, but already in August 1993 the exchange rate mechanism had to endure the hardest test: the actions of speculators forced the EMU to expand the range of allowable fluctuations of exchange rates from 2.25 % up to 15%. In fact, the floating of European currencies has become much freer than ever before, whether in the days of the Bretton Woods system, the "currency snake" or the central rates of the EMU.
Still, the movement towards a European Monetary Union was accelerating. The Madrid summit meeting held in 1995 confirmed the final and irreversible transition to a system of fixed rates with the simultaneous introduction of a single European currency, called the euro. On July 1, 1998, the European Central Bank was established; its prerogative was the implementation of a single monetary and monetary policy of the EU. Since January 1999, eleven countries of the European Union have switched to a single currency. During 1999–2001, the euro must be used for non-cash payments and accounting, and from January 1, 2002, the single currency is introduced into cash circulation.
11. Monetary policy is a set of activities carried out by the Central Bank of the country and other government agencies in the field of foreign exchange relations and monetary circulation, with the ultimate goal of influencing the country's economy and purchasing power national currency.
This definition applies to the level of the nation state. However, it must be borne in mind that there are two more levels of consideration of monetary policy - these are enterprise level (corporation, bank), who take an active part in foreign exchange relations and form their monetary policy, and interstate level, where the formation of the monetary policy of states takes place on the basis of interstate agreements in the monetary sphere.
The most important goal of monetary policy- contribute to ensuring the external balance without violating the internal balance of the country.
Monetary Policy Objectives:
1) Maintaining the stability of the national currency and ensuring non-inflationary economic growth;
2) Providing a system of mutual settlements with other countries;
3) Ensuring the flow of capital between industries and between countries;
4) Creation of conditions for a balanced balance of payments;
5) Formation of the country's gold and foreign exchange reserves.
Monetary policy varies historically depending on the type economic system state, the level of economic development, the evolution of the world monetary system.
Monetary policy can be divided into:
1. Structural (long-term ) - a set of long-term measures aimed at implementing structural changes in the national and world monetary system.
2. current - a set of short-term measures aimed at everyday operational regulation exchange rate, foreign exchange transactions, the activities of the foreign exchange market and the gold market.
Monetary policy is implemented through the mechanism of foreign exchange regulation. There is no consensus in the economic literature on the question of what constitutes currency regulation. So, B. Reisberg considers currency regulation as the activities of state bodies to manage the circulation of currency, control over foreign exchange transactions, the impact on the exchange rate of the national currency, the restriction of the use of foreign currency.
12. Balance of payments- this is the ratio of payments made by the country abroad, and the receipts received by it from abroad, for a certain period of time (month, quarter, year). Distinguish payment balance on current operations and balance of movement of capital and credits.
The most important component balance of payments for current operations - the trade balance, reflecting the ratio of the value of exports and imports of goods of the country for the corresponding period. The balance of payments on current operations also includes payments and receipts from transport, insurance, commission transactions, tourism, interest and dividends on capital investments, and payments on licenses for the use of inventions. The balance of payments also reflects the country's military spending abroad. The balance of movement of capital and loans reflects payments and receipts on export-import of public and private long-term and short-term capital. This includes direct and portfolio investments, bank deposits, commercial loans, special financial operations and others. As noted, the state of the balance of payments for current operations has a direct impact on the exchange rate of the country. With a chronically passive balance of payments, the exchange rate falls, with an active one, it rises. It should be borne in mind that for the dynamics of the exchange rate, the balance of payments on current operations is of primary importance not between two countries, but the overall balance of this balance in relation to all countries participating in the country's international settlements.
An important element The balance of payments are balancing items, which include state gold and foreign exchange reserves, external government loans, loans from international monetary and financial organizations.
The country's general balance of payments is formed by the balance of payments for current operations, the balance of capital and credit movements, as well as the movement of gold and foreign exchange reserves. The country's overall balance of payments is always balanced, that is, its active and passive operations are the same size.
The balance of payments should be distinguished from the balance of payments, which represents the requirements and obligations of the country in relation to foreign countries. These claims and liabilities include state (gold and foreign exchange and other) and private assets, direct investments, loans received and granted, liabilities of financial and non-financial corporations. Unlike the balance of payments, the balance of payments includes all claims and obligations in relation to other countries for which payments have not been made.
In the USSR, the main document in the field of external payment and settlement relations was the Consolidated Currency Plan (the balance of payments of the USSR), compiled by the USSR Ministry of Finance and the USSR State Planning Committee on the basis of the currency plans of ministries and departments and submitted to the government for consideration. After the approval by the government and the approval by the session of the Supreme Soviet of the USSR of the plan for economic and social development country, he became the law.
The consolidated monetary plan included receipts of funds into the country and all payments to foreign countries. It consisted of five sections: trading operations; services; non-trading operations; loans and property; free aid to foreign states.
The indicators of the consolidated foreign exchange plan were compiled in two categories of currencies: in freely convertible currencies and closed currencies foreign countries.
Payment balance Russian Federation was first compiled in 1992 according to the methodology of the International Monetary Fund. The main source of Russia's foreign exchange earnings is the export of goods. The main trading partners of Russia from the countries of the "far" abroad are Germany, Finland, the USA, Great Britain, Italy and China. In the "near" abroad, the first places in terms of foreign trade turnover are occupied by Ukraine, Belarus, Kazakhstan, Uzbekistan and Moldova. In general, these countries account for more than 90% of Russia's turnover with the CIS countries
The structure of Russia's exports last years has not undergone significant changes. Crude oil, oil products, natural gas, as well as timber, pulp and paper products and chemical industry.
The main import items are imports of machinery and equipment, food products and agricultural raw materials. Let us analyze Russia's balance of payments in terms of current operations for 1994-1997. and the first quarter of 1998 (US$ million).
In terms of current transfers, the negative balance is explained by a fourfold decrease in the amount of humanitarian and technical assistance received by the country.
It should be noted that the overall balance of Russia's balance of payments for the indicated years is negative, which reflects the movement of capital between countries. There is a significant outflow of capital, deposited in the accounts of Western banks. True, the direct foreign investment in Russia. Non-residents invested in the financial sector, enterprises of the fuel and energy sector - in industries that provide a quick payback (food industry, catering and trade).
A significant part of the funds by non-residents was placed in government securities- GKO-OFZ (3.1 billion USD). In addition to the GKO-OFZ, in the 1st quarter of 1998 the Government of the Russian Federation issued a seven-year Eurobond loan in German marks for the amount of 1.25 billion German marks at the rate of 9.375% per annum. However, in 1998, foreign non-residents, in the context of an ever-increasing currency crisis, returned their funds, which had a negative impact on the balance of payments.
In general, Russia's balance of payments is in deficit. This, in particular, is evidenced by the large amount and the debit nature of the article “Errors and omissions”.
The balance of payments deficit is financed by the transfer of payments for servicing the official external debt, the use of new internal and external loans by government bodies.
13. The concept of currency and currency values
The term "currency" is used in two senses: firstly, it is the monetary unit of the state; secondly, it banknotes foreign countries, as well as credit and payment documents denominated in foreign monetary units and used in international settlements (foreign currency).*B financial relations and financial law, in official and everyday vocabulary, the term "currency" is most often used in the second sense. In the sources of financial law, the above definition of currency is specified in relation to the objects covered by the concept of "currency". To characterize the ratio of domestic and foreign currencies, the following concepts are used: “irreversible (non-convertible) currency”, used within only one state; "convertible (convertible) currency", which
