About International Monetary System

International monetary system is a set of policies, institutions, practitioners, regulation, mechanisms that determine the rate at which one currency in trade for other currencies. History of the International Monetary System Each state has its own currency, and it shows the value of the currency the goods. However, for international trade, the various currencies in the world should be changed from one currency to another currency. Changes in the monetary system caused by the economic turmoil. By studying the historical experience would be able to obtain an overview of economic instability and the emergence of international balance of payments adjustment process. International monetary and financial system plays a central role in the global political economy. Since the late 19th century, the early establishment of this system through various transformations in response to changing political and economic conditions both domestic and international level. The most dramatic change is a crisis in the international monetary integration and the international regime during the interwar years. The second transformation occurred after World War II when the Bretton Woods system was running. Because in the 1970s, a period of change under the Bretton Woods system there is a change of the gold exchange standard into U.S. dollars and a commitment to capital controls. Various changes have significant political consequences of who gets what, when, and how the global political economy. The evolution of the gold standard and the solution (1930) The concept of the gold standard is penguunaan gold currency as a medium of exchange, a unit of computation and as a means of storing hem. This activity has occurred since ancient times. But the growing phenomenon of trading volume increases with the rise of the industrial revolution encouraged a demand for tools that are easier to fund and support the international trade in order to present the gold standard set and push the government to agree to exchange their paper currency into gold with a fixed exchange rate . Since 1880 the UK, Germany, Japan and the U.S. have adopted this system of gold standard. With the enactment of the gold standard then the value of each currency in the currency of another can be easily determined so as to catalyze international trade. U.S. $ 1 initially rewarded with 23.22 grains of pure gold which 1 ounce of gold equal to 480 grains of gold. In other words the price of an ounce of gold is U.S. $ 20.67. A number of currency needed to buy an ounce of gold called the par value of gold.