Читать реферат по мировой экономике, международным экономическим отношениям: "The international monetary system" Страница 4

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· Interest rates not suitable for whole Eurozone. A common monetary policy involves a common interest rate for the whole eurozone area. However, the interest rate set by the ECB may be inappropriate for regions which are growing much faster or much slower than the Eurozone average. For example, in 2011, the ECB increased interest rates because of fears of inflation in Germany. However, in 2011, southern Eurozone members were heading for recession due to austerity packages. The higher interest rates set by the ECB were unsuitable for countries such as Portugal, Greece and Italy.

· The Euro is not an optimal currency area. If a state in the US, such as New York,was in recession, workers in New York could move to New England and get a job. However, in the Eurozone this is much more difficult; it involves moving country and possibly learning a new language. There are more barriers to the movement of labour and capital within a diverse region like Europe. Therefore, an unemployed Greek can't easily relocate to Germany.

· Limits Fiscal Policy. With a common monetary policy it is important to have similar levels of national debt, otherwise countries may struggle to attract enough buyers of national debt. This is a growing problem for many Mediterranean countries like Italy, Greece and Spain who have large national debts and rising bond yields.

· Lack of Incentives. It is argued that being a member of the Euro protects a country from a currency crisis. Therefore, there is less incentive for countries to implement structural reform and fiscal responsibility. For example, in good years Greece was able to benefit from very low bond yields on its debt because people felt Greek debt would be secured by rest of Europe. But, this wasn't the case, and Greece were lulled into a fall sense of security.

· No scope for Devaluation. Since the start of the Euro, several countries have experienced rising labour costs. This has made their exports uncompetitive. Usually, their currency would devalue to restore competitiveness. However, in the Euro, you can't devalue and you are stuck with uncompetitive exports. This has led to record current account deficits, a fall in exports and low growth. This has particularly been a problem for countries like Portugal, Italy and Greece.

·

shows the effects of Eurozone members becoming uncompetitive. Very high current account deficits.

· No Lender of Last Resort. The ECB is unwilling to buy government bonds if there is a temporary liquidity shortage. This makes markets more nervous about holding debt from eurozone economies and precipitates fiscal crisis. See: Problems of Italy - why Italian bonds increased despite having a much lower budget deficit than UK. Italy bond yields rose despite a primary budget surplus

· Deflationary Bias I would argue there is a deflationary bias in the Eurozone which increases the risk of recession and higher unemployment

members have seen a rise in unemployment.

· Divergence in bank rates. In theory, the Eurzone creates a common interest rate. However, in the credit crisis of 2010-13, we see rising bank rates for peripheral Eurozone countries, like Italy and Spain. Small and medium sized firms faced higher borrowing costs than in 2005, even though the ECB cut the main base rate. This suggests that the ECB was unable to loosen monetary policy when needed

The United States dollar (sign: $; code: USD; also abbreviated US$ and referred to as the U. S. dollar, American dollar or US Dollar) is the official currency of the United States and its overseas territories. It is a Federal Reserve Note and consists of 100 smaller cent units. [4]U. S. dollar is fiat money. It is the currency most used in international transactions and is the world's most dominant reserve currency. [14] Several countries use it as their official currency, and in many others it is the de facto currency. [15] Besides the United States, it is also used as the sole currency in two British Overseas Territories: the British Virgin Islands and the Turks and Caicos islands.dollar has a special place in the global economy, being essentially the first truly international currency.world monetary system spontaneously formed in the XIX century after the industrial revolution based on gold monometallism in the form of the gold standard. Legally, it was framed intergovernmental agreement at the Paris Conference in 1867 that recognized the gold the only form of world money. In this system belonged dollar in 1837 received the gold content. The currency freely convertible into gold. Gold was used as generally recognized world money. Gradually the gold standard outlived its usefulness, because did not meet the increased scale of economic relations and conditions regulated market economy. The First World War was marked by the crisis of the world monetary system. The gold standard ceased to function as money and monetary system.War II monetary system was legally intergovernmental agreement reached at the Genoa international economic conference in 1922. Its foundation was gold and foreign currencies. Conversion of currencies into gold was carried out not only directly (US, France, Britain), but also indirectly through foreign currency (Germany and another 30 countries whose monetary system based on gold exchange standard). National credit money were used as international payment and reserve funds. However, in the interwar period reserve currency status has not been officially confirmed by either in one currency and the pound sterling and the US dollar disputed leadership in this area. The Great Depression of 1929-1933. sharply devalued dollar, its gold content decreased by more than 40%.War II led to the deepening crisis Genoa monetary system. Anglo-American experts in 1941 rejecting the idea of

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