After World War II, the Bretton Woods system (1944-1973) replaced gold with the U.S. dollar as an official reserve. The scheme aimed to link binding legal commitments to multilateral decisions on the International Monetary Fund (IMF). The rules of this system have been set out in the articles of the IMF and the International Bank for Reconstruction and Development. The system was a monetary order designed to regulate monetary relations between sovereign states, with the 44 member countries required to set parity of their national currencies against the U.S. dollar and to keep exchange rates within 1% of parity (a „band“) by intervening in their foreign exchange markets (i.e. by buying or selling foreign money). The U.S. dollar was the only currency strong enough to meet the growing demands of international currency transactions, so the United States agreed to link the dollar to gold over the gold ounce and convert the dollar into gold at that price.
[6] Clearing and settlement of all transactions is carried out by European Commodity Clearing (ECC), Europe`s leading energy clearing unit. ECC clearing facilitates cross-investment across all gas platforms. Cross-margining functionality is also available for all raw materials, such as electricity. B, emissions, etc. To qualify for ECC compensation, members must sign an agreement with an approved compensatory member. In 1973, the currencies of the countries of the European Economic Community, Belgium, France, Germany, Italy, Luxembourg and the Netherlands, participated in an agreement called Serpent. This regime is classified as exchange rate cooperation. Over the next six years, the currency of the participating countries fluctuated in a range of plus or minus 21.4% around the pre-announced pivotal rates. Subsequently, in 1979, the European Monetary System (EMS) was created, with the participating countries being founding members of the „file“. The EMS evolves over the next decade and even leads to a truly fixed exchange rate in the early 1990s. [21] It was at this time, in 1990, that the EU introduced Economic and Monetary Union (EMU), as a generic term for the policy group aimed at converging the economies of EU Member States over three phases [25] International economic relations and trade take place in different monetary systems.
One country`s currency cannot be tendered in another country. Thus, the individual or organization requires the purchase of the currency of the destination country. In fact, it is the process of converting one currency into another currency that enables globalization and international trade. Currency buying and selling occurs in the spot market, the futures market, the futures market, the swap market and the options market. In addition, changes in prices, structural changes, speculation, inflation, interest rates, public debt and the status of terms of trade act in the equilibrium position of the exchange rate. But the demand and supply of the currency determine the appreciation and devaluation of the currency. The exchange rate is accepted as a fixed rate, variable rate, crawling band, crawling-peg, conventional fixed fixing, fixed exchange rate within the horizontal band, board of directors, dollarization and not a separate legal course.
Comments are closed.