International currency relations involve the conclusion of transactions of two or more countries, the main element of which is the currency, that is, the estimated cash. The government of any country independently decides which form of interaction with foreign states to choose.
The functioning of funds in the global financial market is inextricably linked with such a concept as international monetary relations. They are considered dependent on the national monetary system of the state, since they vary from the conditions of the armed forces. So, back to the most important element - the currency. It is of several types:
- partially convertible;
- freely convertible;
- not convertible.
In modern conditions, there are about 209 types of currencies, of which only 27 are considered freely convertible. That is, they can be used in absolutely all transactions in the global financial market and exchanged for another currency in any country without restriction. For example, such, of course, is the American dollar, Japanese yen, as well as the currency of Great Britain, Germany, etc.
If we talk about the Russian ruble, then it has partial convertibility. That is, the government imposes a restriction on the exchange of this currency, establishing only certain types of foreign currency, for which the ruble can be freely exchanged. Moreover, such restrictions are supported and controlled by certain regulatory acts of the current legislation.
International currency and settlement relations cannot be carried out using non-convertible currency, since it is in free circulation only in the territory of the country in which it is national. A clear example is the domestic currency, since until 1992 the ruble could not be exchanged for foreign currency.
The role of gold in international monetary relations
As you know, at present, most countries have abandoned the gold exchange standard. If earlier precious metals could also act as a settlement instrument under international agreements, then the modern world market recognizes only hard currencies. Currently, these include the US dollar, Japanese yen and the euro. Economists believe that in the next decade the dollar may give way to a leading position, because the latest crisis has significantly undermined the confidence of the population of other countries.
Despite the fact that gold can no longer be directly exchanged for goods, and prices in this equivalent are not set by the government, they have not completely replaced it from circulation. Of course, it is impossible to consider precious metals as full-fledged money , since the function of the means of payment is not fulfilled. But there is a gold market where it can be exchanged for convertible currency.
International currency relations provide for operations in which gold is of no small importance. Indeed, in many situations it serves as a guarantee of the return of international loans, is a measure of the country's well-being. And as an exception, it also acts as a means of calculation in the relations of various states. Thus, we can say that precious metals take a passive position in the capital flow of any country, but at the same time they are a reserve fund that insures against unforeseen situations.
The popularity of gold reserves increases during the economic crisis, especially on a global scale. When the exchange rate changes quite sharply, and forecasts differ from reality, the question arises of how to organize international currency relations so that it is beneficial to each side. Most states are actively replenishing the gold reserve, because it does not exist more reliably than this extraordinary world currency.