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Term |
Explanation |
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Bretton Woods agreement 布雷顿森林协定 |
Appear within 07/1944 to year of 1973. Encourage the using of US dollar as major
currency in international market by most of the country and aim to become the
only world currency. Collapse: ·
Many European countries believe that gold is
more value preserving and fixed exchange rate is not beneficial to their
countries. ·
Happening of dollar crisis within 1960s to
1970s, US refuse to sell gold, devalued the gold price which destroy the
Bretton woods system that pegs with gold. ·
In February 1973, the U.S. dollar further
depreciated |
|
International Bank for Reconstruction and
Development (World bank) and international monetary system (IMF) |
Role and function: ·
Help countries defend their currencies ·
Maintain the stability of world’s monetary
system. ·
Provide loan and capital support to the
countries. ·
Provide support to help the country to develop
their economic and policy. ·
Promote international financial cooperation. ·
Enhance international trading |
|
IMF Exchange rate System |
Pegged Exchange rate system: · Hard Pegs 硬性挂钩 Refer
to the country that did not have an own legal currency or using the currency
board system and use other country currency as legal currency. For example, the
dollarization and currency board.
指的是没有一个自己的法定货币或者利用货币发行局制度，以及使用其他国家货币作为法定货币的国家。 例如，美元化和货币委员会。 · Soft Pegs 软性挂钩 Refer
to the country that pegs own country currency with another country currency
and keep in limited floating by market intervention such as the foreign
exchange reserves. For example, the conventional fixed pegs, intermediate pegs
(crawling pegs), stabilized arrangement. 指将本国货币与另一国货币挂钩并通过外汇储备等市场干预保持有限浮动的国家。例如，常规的固定钉、中间钉（爬行钉）、稳定排列。 Floating Exchange rate system：
·
Free floating rate自由浮动汇率 Refer
to the country that relevant agencies are less or no intervention to the
foreign exchange market which highly affected by the element of the market. 指相关机构对外汇市场干预较少或不干预，受市场要素影响较大的国家。 ·
Manage Float rate 管理浮动汇率 In a
common situation, the interest rates decide by the market demand and supply
naturally but relevant agencies such as the world bank will intervene
appropriately to alleviate and avoid improper fluctuation. 在一般情况下，利率自然由市场供求决定，但世界银行等相关机构会适当干预，以缓解和避免不当波动。 Crawling peg爬行钉住: Between fixed and float exchange rates,
refer to a small intervene and a small amount of adjustment to the currency
to respond to the change in pre-published data. 在固定汇率和浮动汇率之间，是指对货币进行小幅干预和小幅调整，以应对预先公布的数据变化。 Pegged with horizontal bands水平区间钉住: Allow the currency value flow to move around
a certain range, usually the fluctuation will be allowed to be greater than
1%. 允许币值流动在一定范围内波动，通常允许波动大于1%。 |
|
Fixed / Flexible exchange rate |
Fixed exchange rate Advantages: ·
Relatively higher stability ·
Relatively lower risk from fluctuation. Disadvantages: ·
Lack of flexibility ·
Higher rate of cause inflation. ·
Require many countries or agencies to pay great
price for defend, adjustment and maintain. |
|
Three Impossible Trinity of Finance |
·
Exchange rate stability ·
Monetary independence ·
Full financial integration |
|
Benefit of Euro |
·
Cheaper transaction cost in eurozone ·
Relatively stable and higher value. ·
Lower risk and cost of uncertainty. ·
Higher competitive currency |
|
Three common features that make emerging
market choices difficult: |
·
Weak fiscal, financial, and monetary
institutions · Tendencies for commerce to allow currency substitution
and the denomination of liabilities in · Dollars The emerging market’s vulnerability to
sudden stoppages of outside capital flows |
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https://spotthewrld.blogspot.com/2021/06/what-is-pearsons-uncertainty.html
Describe any FOUR (4) factors that cause a shift in the demand curve
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