In brief, the international monetary system is the system through which countries settle debts with one another. It is needed for much the same reason as monetary systems are needed at the national level. Specialization requires things to be exchanged, and there has to be something that acts as a medium of exchange. This is the basic function of money. Specialization at the global level, or so-called globalization, requires an international medium of exchange. The world needs a system whereby people in one country using one national currency can buy and sell goods, services, and financial assets denominated in other currencies; this system is the international monetary system.
Any international monetary system comprises a number of elements. First, where countries encounter disequilibria in their balance of payments, there needs to be a mechanism through which such disequilibria can be corrected. This is the adjustment mechanism. Second, there has to be a way in which adjustment can be...
Further Reading
Bird G (2003) The IMF and the future: issues and options facing the fund. Routledge, London
Bird G (2007) The IMF: a bird’s eye view of its role and operations. J Econ Surv 21(4):683–745
Bird G, Rowlands D (2010) The IMF and the challenges it faces. World Econ 11(4):131–156
Bird G, Rowlands D (2016) The IMF: distinguishing reality from rhetoric. Edward Elgar Publishing, Cheltenham
de Beaufort Wijnholds O (2010) The international financial architecture: yesterday, today and tomorrow. World Econ 11(2):113–131
Kenen, Peter B. Jeffrey Shafer, Nigel Wicks and Charles Wyplosz 2004, International economic and financial cooperation: new issues, new actors, new responses, Geneva Reports on the World Economy, No.6
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Bird, G. (2017). The International Monetary System and the International Monetary Fund. In: Farazmand, A. (eds) Global Encyclopedia of Public Administration, Public Policy, and Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-31816-5_3362-1
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