The evolution of world monetary systems briefly. Stages of evolution of the global monetary system

The evolution of world monetary systems is guided by reproduction indicators. It is determined by the main stages of development of not only the world, but also the national economy. At times, the principles of the world monetary system begin to contradict the structure of the world economy, do not correspond to the distribution of resources between the main centers. This leads to a crisis of the MVS. Currency contradictions arise as a result of a mismatch between the structural principles of the world mechanism and the changing conditions of production, trade and the distribution of world forces. The evolution of world monetary systems, which will be briefly described below, is determined by the needs of the national and world economies, the need to change the balance of power. Only flexibility and variability, the ability to adapt to the situation of financial instruments and provided the basis for the existence and development of modern society.

Key elements: evolution of the global monetary system

MVS overcame the thorny path of its formation before adopting a modern format. Throughout its long history of development, the principles of the system have changed 4 times, which was accompanied by the decision of the relevant international conference. The name of the structure itself was also changed, which began to correspond to the name of the city in which the conference was held.

Consider the stages of evolution of the global monetary system:

• The Paris system of 1867, known as the "gold standard." For each national currency, a gold content was characteristic, starting from which an exchange was made for other currencies or gold. There was a floating exchange rate.
• The Genoese system of 1922, known as the "gold exchange standard." In addition to gold reserves, each currency of the world was supported by the currency of a leading economic country, mainly the British pound.
• The 1944 Bretton Woods system, known as the "dollar standard." A prerequisite for the formation of the system was the active development of America in the postwar period. Gold was used in limited quantities.
• The Jamaican system of 1976 - 78 years, known as the "standard of special credit measures." SDR acted in the format of assets (specialized records in the IMF accounts). The introduction of SDRs is explained by the desire of all countries of the world to ensure stability in the aspect of international mutual settlements.

"Gold standard"

The evolution of world monetary systems began with the "gold standard", which was valid from 1867 to the 20s of the 20th century. The formation of the financial structure was spontaneous. The main impetus for the Paris Air Force was the industrial revolution of the 19th century and the expansion of international trade according to the gold standard. The main characteristics of the financial system were the following provisions:

• Fixed gold reinforcement of national currencies.
• The role of universal means of payment and world money was played by gold.
• Bank notes issued by the Central Bank changed to gold without restrictions. The exchange was based on gold parities. The deviation of the exchange rate was allowed within monetary parities, which formed a fixed rate.
• In international circulation, along with gold, the pound was recognized.
• Domestic money supply corresponded to the state’s gold reserve, which automatically regulated the balance of payments of states.
• The lack of balance of payments was blocked by gold.
• Between the states the movement of gold was free.

This stage of development is not the most effective, not the peak that the evolution of the world monetary system ultimately reached. The Paris currency system suffered from non-compliance by participants in the global financial market. The flow of gold between states did not always take place. England held the position of the main financial state, regulated not only bank interest, but also gold flows. The main reason for the successful development of the “gold standard” was not its effectiveness as a system, but the quiet development of the world economy in the pre-war periods.

Gold Exchange Standard

Stages of evolution of the global monetary system include the dominance of the “gold exchange standard”, which took place from 1922 to the 30s. After the First World War had exhausted itself and all foreign economic relations between the countries were restored, it became necessary to form a new MVS. At a conference in Genoa, the question was raised that the capitalist countries did not have enough gold to regulate relations in the segment of foreign trade settlements and other operations. In addition to gold and the British pound , it was decided to introduce the American dollar. Two currencies assumed the role of an international payment instrument and received the title of slogan. The system was adopted by Germany and Australia, Denmark and Norway. By its principles, the system was almost completely consistent with its predecessor, the Paris system. Gold parities remained, and the role of world money was still entrusted to gold. Moreover, the evolution of world monetary systems has led to the fact that certain national banknotes were exchanged not for gold, but for other currencies, called slogans, which were then exchanged for gold bullion.

The formation of the first dependencies

World monetary systems and their evolution, in particular the adoption of the “gold exchange standard”, have led to the formation of the first dependencies of some countries on others. There were only two formats for exchanging the national currency for gold. It is direct, intended for pounds and dollars, which played the role of mottos, and indirect, for other currencies within this system. In this MVS the consolidated floating exchange rate was applied . Through the use of foreign exchange interventions, the states of the world were obliged to support any deviations of the national currency. It is the distribution of gold and foreign exchange reserves between states that formed the basis for the formation of interconnections.

The gold exchange standard was not the main MVS for a long time. After the liquidation of the crisis of 1929-1922, the system was completely destroyed. Already in 1931, Great Britain completely renounced the gold standard and devalued the pound. As a result of a number of European states, including India, Egypt and Malaysia, the collapse of national currencies occurred due to the strong economic relationship with England. In 1936, Japan and France abandoned the gold standard. In 1933, in America, along with the refusal to exchange banknotes for gold, the export of the latter abroad was prohibited and the dollar devalued by about 41%. This period, which the evolution of the world monetary systems will remember for a long time, became the moment of the transition to currency circulation of money that is not exchangeable for gold, in other words, credit funds.

"The dollar standard"

In the city of Bretton Wood in 1944, 44 countries of the world gathered at an international conference. An agreement was reached on the formation of a structure of correlated exchange rates of a regulated type. The system lasted from 1944 to 1976. Its main characteristics were:

• The role of world money went to gold. In parallel, currencies such as the dollar and the pound were used.
• International financial organizations have been formed: the International Monetary Fund (IMF) and the World Bank for Reconstruction and Development (IBRD). The main task of organizations was to regulate financial relations in the world between the member countries of the system. All IMF member countries automatically acted as members of the World Bank.
• A system of adjustable courses was introduced, which allowed either to keep the rate at the same level, or to adjust it by prior agreement with the IMF. It was planned to establish courses at a level that would allow states to effectively develop due to the advantages of international trade and the flow of capital. In the absence of the ability to implement this program, the courses were revised.
• Snap dollar to gold. The evolution of the global monetary system (briefly discussed in this article) has led all countries to strive to have a dollar supply. Only America had the right to exchange currency for a precious metal at a price of $ 35 per ounce. The rest of the countries declared the exchange rates of their currencies in gold or dollars, supporting them by buying or selling those very dollars in the framework of the foreign exchange market.
• Formation of a fund of international reserves. The reserve contribution of each state was determined by the volume of international trade and corresponded to 1/4 of gold or dollars and 3/4 of the national currency. It was the share in the fund that directly affected the permissible amount of a foreign currency loan from the IMF.

The situation in the world during the "Dollar Standard"

The evolution of world monetary systems, which can be briefly examined using the prevailing standards over time, has led to the fact that during the period of the "dollar standard" the G7 states began to set the direction for the development of the world economy. They accounted for about 44.8% of the vote. America owned 18%, and Russia - 2.8%. This formed the peculiarity that America and other G7 states could directly influence the adoption or rejection of any decisions. Since the advent of this structure, a sufficiently large number of material resources have been allocated for the development of a significant number of countries.

The evolution of the global monetary system: a table of the structure of loans in the period of the "dollar standard"

Despite the prospects of the system, it did not last long due to the fundamental differences between the national economy and the world. The beginning of the fall of the system was given by the deficit of the payment system of America, which transferred dollars in the form of a reserve world currency. By 1986, the US external deficit was $ 1 billion. Despite the tolerance of the situation, the phenomenon had its consequences. In 1971, President Nixon refuses to peg the national currency to gold, as society expects a devaluation of the currency and begins to actively buy gold, which America, in accordance with its obligations, is forced to sell. The dollar was set free, the era of the "dollar standard" has completely exhausted itself.

“Standard for special lending measures”

The evolution of the world monetary system, which is briefly discussed in the article, did not stand still, and the "standard of special lending measures" replaced the "dollar standard". It was adopted in the period from 1976 to 1978 and is actively used today. The main characteristics of the Jamaican currency system are the following:

• Capital abandonment of the gold standard.
• The demonetization of gold is officially accepted. The role of the precious metal as a global means of payment has been canceled.
• Gold parity has been banned.
• Central banks retained the right to buy and sell gold as ordinary goods at the price set on the free market.
• Adoption of the SDR standard, which could be used as world money, and also used as a base for calculating the exchange rate of official assets. SDR is actively used for settlements of international type due to records in accounts and as a unit of account of the IMF.
• The role of reserve currencies was given to the American dollar and the FRG mark, the pound sterling and the Swiss franc, the Japanese yen and the French franc.
• The exchange rate is floating, it is formed in the foreign exchange market due to supply and demand.
• States have the right to independently establish a regime for the exchange rate of the national currency.
• The scope of currency fluctuations is not controlled.
• The formation of closed currency-format blocks, which are considered to be participants in the IMF, has become legal. A striking example of this category of education is the European Monetary System (EUR).

World monetary system: its evolution of a nonlinear type

The world monetary systems in the order of their appearance led to the formation of the European monetary system, which acts as a set of economic relations that are related to the functioning of national currencies within the framework of European economic integration. EMU is an important component of the entire MVS. The structure includes three main components:

• The ECU is a standard adopted in 1979 that defined a new form of ECU reserve, which appears in tandem format from 12 European currencies.
• A free floating course with a deviation range within 15%, both upward and downward. The mechanism of exchange rates and interventions has been formed.

Artificially created accounting units of the SDR and ECU type cannot be used as real currency arising as a result of the integration of a number of states. Since 1999, 11 out of 15 countries have agreed to the introduction of a single currency, the euro. Already in 2002, the countries that agreed to the adoption of the new currency completely integrated into the European zone and completely abandoned their currency.

What criteria should meet the participants of the "euro zone"?

The evolution of the world monetary system, in the chronological sequence discussed above, has not only a linear structure. EMU became a branch, to which any of the countries of the world can join, which will meet a number of criteria:

• The inflation rate in the country should not exceed by more than 1.5% the value of an identical indicator in the territory of three states with a minimum increase in the cost of goods and services.
• The budget deficit in the country should be less than 3% of GDP.
• Public debt should be within 60% of GDP.
• For 2 years, the national currency exchange rate should not cross the corridor established by the EMU standards (+/- 15%).

The currency system, characteristic of industrialized countries, controls not only monetary transactions, but also internal cash flows. This is the most practical solution in the modern world. At the same time, the evolution of world monetary systems and modern currency problems are tightly interconnected, since they have their origin in one source.

Link IFS and national financial systems

The evolution of world monetary systems, which is briefly discussed in this article, began with a spontaneously functioning structure based on gold reserves, and gradually modernized into a focused and regulated structure based on paper and credit material resources. The development of the MVS goes one step at a time, with a range of 10 years, with the dominant stages in the formation of national monetary structures. In the domestic economy, monetary structures gradually transformed from a gold coin standard to a gold bullion standard, then into a gold exchange one, and finally came to a paper and credit system, where credit plays the main role.

To summarize what the world monetary systems were. The table above allows you to track the main stages of evolution.