The International Monetary System

  • Ramesh F. Ramsaran


At the domestic level a national currency performs three major functions — a medium of exchange, a unit of account and a store of value. The pricing of goods and services in terms of the local money and the latter’s status as legal tender facilitates domestic trade. A currency also allows the storing of purchasing power for future use. With respect to trade between countries, there is no international currency issued by a supranational central bank. The functions of money have largely been performed by metal, mainly gold and silver, or by the currencies of the major powers. In the post-war period, the US dollar has been the main money performing the role of an international currency. The pricing of goods and services, the settling of debt and the keeping of reserves in US dollars have reduced information and transaction costs. To enhance the role of the dollar as an international currency, the US government assumed specific responsibilities within the institutional arrangements that came into force at the end of the Second World War. Those arrangements while reflecting the economic imperatives and intellectual fervour of the time, were filled with compromises that left many critical questions hanging in the air. Many of the problems which the founding fathers of the Bretton Woods system grappled with are still with us today.


Exchange Rate International Monetary Fund Vote Power Debtor Country International Money 
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Further Reading

  1. Bretton Woods Commission, Bretton Woods: Looking to the Future, Washington, DC, 1994.Google Scholar
  2. Eichengreen, B., International Monetary Arrangements for the 21st Century, The Brookings Institution, Washington, DC, 1994.Google Scholar
  3. Guitan, M., ‘The IMF as a Monetary Institution: The Challenge Ahead’, Finance and Development, Vol. 31 (September, 1994), pp. 38–41.Google Scholar
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  9. Shelton, J., Money Meltdown, The Free Press, New York, 1994.Google Scholar
  10. Solomon, R., The International Monetary System1946–1976, Harper and Row, New York, 1977.Google Scholar
  11. Ul Haq, Mahbub, Richard Jolly, Paul Streeten and Khadija Haq, The UN and the Betton Woods Institutions, The Macmillan Press Ltd., Houndmills, Basingstoke, 1995.CrossRefGoogle Scholar
  12. United Nations Conference on Trade and Development, International Monetary and Financial Issues for the 1990s, Vols. I and II, New York, 1993.Google Scholar
  13. Williamson, J. (ed.) IMF Conditionality, Institute for International Economics, Washington, DC, 1983.Google Scholar
  14. Van Dormael, A., Bretton Woods: Birth of a Monetary System, Holmes and Meier Publishers, New York, 1978.CrossRefGoogle Scholar

Copyright information

© Ramesh F. Ramsaran 1998

Authors and Affiliations

  • Ramesh F. Ramsaran
    • 1
  1. 1.Institute of International RelationsUniversity of the West IndiesSt AugustineTrinidad

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