跨国公司理财第3周课件

Attributes of the “Ideal” Currency
• Possesses three attributes, often referred to as the Impossible Trinity:
History of the International Monetary System
• The Inter-War Years & WWII (1914-1944)
– Currencies were allowed to fluctuate over a fairly wide range in terms of gold.
– established a US dollar based international monetary system
– created two new institutions
• International Monetary Fund (IMF) • World Bank
– Special Drawing Right (SDR)
Fixed Versus Flexible Exchange Rates
• Countries would prefer a fixed rate regime for the following reasons:
– stability in international prices – inherent anti-inflationary nature
• The problems of fixed rate regime:
– maintain large quantities of international reserves – Fixed rates can be maintained at rates that are
inconsistent with economic fundamentals
– During WWII the US dollar was the only major trading currency that continued to be convertible
History of the International Monetary System
• Bretton Woods and the International Monetary Fund (IMF) (1944)
Contemporary currency regimes
• The IMF’s Exchange Rate Regime Classifications:
– Exchange arrangements with no separate legal tender – Currency board arrangements – Other conventional fixed peg arrangements – Pegged exchange rates within horizontal bands – Crawling pegs – Exchange rates within crawling pegs – Managed floating with no pre-announced path – Independent floating
History of the International Monetary System
• EurocurrenLeabharlann Baiduies
– These are domestic currencies of one country on deposit in a second country
– two valuable purposes:
• The Gold Standard (1876 – 1913)
– “Rules of the game” : each country set the rate at which its currency unit could be converted to a weight of gold
– Currency exchange rates were “fixed”
• holding excess corporate liquidity • a source of short-term bank loans
History of the International Monetary System
• Eurocurrency Interest Rates: LIBOR
Contemporary currency regimes
• The choice between Fixed and Flexible Rates
• A nation’s choice reflects national priorities including:
– inflation, – unemployment, – interest rate levels, – trade balances, – economic growth.
Chapter 2
The International Monetary System
Topics
• History of the International Monetary System
• Contemporary Currency Regimes
History of the International Monetary System
– Attract both depositors and borrowers to Eurocurrency markets.
– Loan rate are lower – Deposit rate are higher
Contemporary currency regimes
• Demonetization of gold • Diversification of international reserves • Legalization of Floating regime