Under the monetary system in the modern world refers to money circulation both within developed countries and monetary relations with other states. The world monetary system did not immediately take the form in which we are accustomed to see it.
Initially, this system developed spontaneously; no one made attempts to regulate it. At that time, it was based on the gold standard, but gradually it began to be regulated. As a result, she came to the conclusion that it is based on paper and credit money.
The modern world monetary system has come a long way of development, which in many respects repeated the stages through which the national monetary systems of individual states had to go. For example, the original any national monetary system was based on the gold standard, gold was the key to stability and acted as a payment method. Later, the use of gold coins was abandoned, using only bullion as collateral. At the last stage, these systems came to the use of paper-credit money, here the main role is given to credit funds.
The currency system in the international arena
The world monetary system has followed approximately the same path . Although there are slightly different laws on the world stage, the situation in the development of the system had similar trends. The main difference is that there has never been a golden coin period in international relations, and the use of ingots has been maintained for several centuries.
However, at the same time, various auxiliary credit money was developing. Initially, they became special bills or checks. All this expressed the debt obligations of one country or another to another state or the international community.
World monetary system in the twentieth century
By the beginning of the twentieth century, the situation in the world began to change, primarily in the economic and trade relations of states. In this situation, the world monetary system has ceased to satisfy all the requirements of such relations. Reforms were needed that could bring this system to a new level.
The national and world monetary system was to become less spontaneous, so reliable control was required. In this regard, by the 30s, the state switched from the use of the gold bullion standard to paper-credit relations. Such a system provided several additional opportunities for economic regulation.
The Second World War, which significantly changed the balance of power in the world, greatly influenced this situation. In particular, large gold reserves were concentrated in the United States, so the influence of the dollar spread.
In 1944, for the first time, it was decided to formally establish the principles of the world monetary system. At the UN conference, gold was recognized as the basis of the system, and the dollar and pound were called the main currencies of the world. Then the international monetary fund was founded. All this helped to make world currencies more convertible, and it also helped to settle many relations and get rid of the chaos that prevailed then in the international economy.
However, later the situation began to change, Europe and Japan were able to bypass the United States in gold reserves, so the economic basis that underpinned the international monetary system was shaken. The dollar began to fall, and many countries refused to maintain the course of their national currencies on par with the dollar. The United States devalued the dollar, and in many states switched to floating rates.
Since 1973, the price of gold began to be determined in international markets, and the world monetary system got rid of the influence of gold. Such relationships still exist, although changes are periodically made to meet international requirements.