Institutional framework for international firms

15 important questions on Institutional framework for international firms

Pillars of global economic and financial governance:

  • IMS
  • international trade
  • institutions to promote economic development
  • institutions for global governance

A set of rules to govern international monetary transactions

International monetary system

Purchases and sales of international reserve assets

Official reserves
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All currencies are defined with respect to gold and convertible to cash

Gold standard

Monetary order in which currency's value was pegged against dollar gold measure of value

Dollar-gold bretton woods

Free floating bank currencies are composed of fiat currencies

Current ERA

Government issued currency not backed by commodity

Fiat currency

Exchange rate arrangements:

  1. Hard peg
  2. soft peg
  3. floating

The national currency is either fixed to gold, to a foreign currency or to a basket of currencies

Hard peg

Abandon national currency and use currency of another country as legal tender

No separate legal tender

Maintain stable value of the domestic currency against an anchor currency

Soft peg

Arrangement typical of advanced economies and large emerging markets where the exchange rate is determined by the market

Floating

Promoting international trade through eliminating trade barriers

WTO

Mechanisms and organisations for disputes:

  • WTO
  • ISCD
  • Court of justice
  • court of arbitration

Work for sustainable solutions that reduce poverty and build shared prosperity in developing countries

World bank

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