The monetary system of the world is a form of organization of monetary relations that have developed at this stage of market development. Its origin is associated with the emergence of money and the beginning of its functioning as a means of calculation in the international payment turnover.
The evolution of the monetary system has become a completely natural phenomenon, without which the development of the world economy would have been impossible. Both the introduction and the rejection of the gold standard are a response to the demands of the times, as well as confirmation of the cyclical nature of human history and the global economy.
Stages of development of the international monetary system and their features
1. The system of the gold standard (1821-1939), according to which any currency should have been provided with gold. The banks of each country pledged to ensure the free conversion of their money to precious metal at the request of the client. The currency system assumed fixed exchange rates fixed for each individual currency. Of course, this had a positive effect on the development of trade between countries and international investment due to the stabilization of the economic situation. Nevertheless, this monetary system had a number of shortcomings, which led to the fact that on the eve of World War II it had to be abandoned. Among them is the dependence of the welfare of the population not on the development of the economy, but on an increase or decrease in gold production, as well as the impossibility of countries to pursue an independent monetary policy.
2. The Bretton Woods system (1944-1976). This monetary system assumed
floating exchange rates, which allowed them to respond to changes in market conditions. The exchange rate of all currencies was fixed in US dollars, and the American government had to ensure the exchange of its currency for gold. It was during this period that such an influential
international monetary and financial organization as the IMF was created, the main purpose of which is precisely the development of trade between countries, as well as cooperation between them in the field of monetary and monetary relations. However, over time, it turned out that governments were not at all interested in adjusting the exchange rates of their monetary units, and the proper level of liquidity could no longer be provided. In addition, dependence on the United States was also not pleasant for many countries.
3. In 1976, it was decided to switch to the Jamaican currency system, according to which the exchange rate of any currency is determined by the law of supply and demand. The modern monetary system assumes an independent determination by the Central Bank of the state of the exchange rate regime, which allows for its long-term flexibility and short-term stability, which favorably affects the development of trade and finance. The disadvantages of the Jamaican currency system include: high
inflation, sharp changes in exchange rates and the volatility of the economic situation in the market. In this regard, the leaders of each country should pay much more attention to strategic and operational planning, because now the well-being of the population depends only on their concerted actions.