The international monetary system is a set of certain legislative acts and rules governing the work in the foreign exchange markets of central banks that provide the issue of cash . The objective of the main provisions that guide them in their activities is to facilitate the processes of external trade operations to such an extent that all participants in the transaction have the maximum benefit. The effectiveness of world trade should contribute to the prosperity of the economies involved.
The international monetary system has been historically built by organizing monetary relations between different countries. Its basic principles are enshrined in the agreements existing at interstate levels. The emergence and further evolution of the international monetary system indicates the objective development of the function of international capital, which requires certain conditions within the global monetary sphere.
Economic relations between different countries without a clear system of financial relations are impossible. They are understood as economic calculations that are directly related to the functioning of the world currency. Economic relations between states are very diverse. These include foreign trade relations, tourism, the exchange of scientific discoveries, the migration of capital, the offer of loans, etc.
The international monetary system, performing the function of world money, which serve as a criterion for the value of the goods, is a means of accumulation, payment and circulation. The main task that it performs is to mediate international settlements.
The international monetary system is a component of a number of structural components included in it. The main ones are:
- arrangements between countries;
- monetary and financial interstate organizations;
- monetary world goods;
- Exchange Rates;
- interethnic liquidity.
The international monetary system includes various funds and organizations. These structures bring together many states, national societies and institutions created to achieve common goals related to politics, economics, the social sphere, culture, science, etc.
Organizations of the international type form their own funds, the purpose of which is the multifaceted coordination actions of all participating countries. This process becomes possible after the signing of agreements, the action of which is aimed at maintaining a unified financial, currency and credit policy of the participating countries. Such international organizations include the following: IIB, MVES, IBRD, IMF, UN with all its institutes, IAEA, WFDD, etc.
World monetary goods can be taken into account in any state as a means of compensating for the wealth exported from the country. It caters to international relationships. Initially, gold was used as an international means of calculation. Over time, it was replaced by the currencies of the leading states of the world. At the moment, fiduciary or compositional money (SDR, ECU) has spread. Their use is based on a trusting relationship with the issuer.
Currency does not apply to any new type of cash. This is a special way of functioning. National funds that act in mediation of credit and international relations, automatically become a currency. Its value is determined in relation to the currency of another country. Certain factors influence their exchange rate . These include:
- solvency of the state;
- supply and demand in the currency market;
- balance of payments;
- inflation.