The%20Bretton%20Woods%20System - PowerPoint PPT Presentation
Title:
The%20Bretton%20Woods%20System
Description:
International Monetary Fund. The Bretton Woods System ... International Monetary Fund. IMF Credit Facilities. Stand-By Arrangements (SBA) ... – PowerPoint PPT presentation
Number of Views:283
Avg rating:3.0/5.0
Title: The%20Bretton%20Woods%20System
1
The Bretton Woods System
- Create a set of rules that would maintain fixed
exchange rates in the face of short-term
fluctuations - Guarantee that changes in exchange rates would
occur only in the face of long-term, persistent
deficits or surpluses in the balance of payments - Ensure that when such changes did occur, they
would not spark a series of competitive
devaluations.
2
The International Monetary Fund (IMF)
- The IMF was intended to play two major roles in
the Bretton Woods System - the Fund should discourage aggressive exchange
rate behavior by members and help them manage
their balance of payments efficiently - the Fund was given resources to lend
international reserves to countries with balance
of payments difficulties.
3
The Quota System
- The IMF is financed by its members. Upon
joining the IMF, a nation has to subscribe to a
Quota, which is based on its relative economic
significance and the level of its international
business activities. The size of the members
quota determines the countrys voting power and
borrowing rights.
4
The Quota System
- Voting Power
- 250 basic votes plus one vote for each
SDR100,000 of quota. - Borrowing Rights
- Unconditional Borrowing Rights
- Conditional Borrowing Rights
5
IMF Credit Facilities
- Stand-By Arrangements (SBA)
- Extended Fund Facility (EFF)
- Supplemental Reserve Facility (SRF)
- Contingent Credit Lines (CCL)
- Compensatory Financing Facility (CFF)
- Poverty Reduction and Growth Facility (PRGF)
6
Functions of the IMF
- The Bretton Woods System was officially
abandoned in 1973. With the collapse of the
system, the IMFs functions changed to - Policy Cooperation
- Share Expertise
- Financial Assistance and
- Help the Worlds Poorest Countries
7
Structural Adjustment Programs
- Cut Social Spending
- Shrink Government
- Increase Interest Rates
- Eliminate Tariffs
- Eliminate Regulations on Foreign Ownership of
Resources and Businesses - Cut Subsidies for Basic Goods and
- Re-orient Economies from Subsistence to Exports
8
The Special Drawing Right (SDR)
- The Special Drawing Right (SDR) is an
international reserve asset created by the IMF to
supplement existing reserves. It is valued on
the basis of a basket of five currencies and can
be used in a wide variety of transactions and
operations among official holders.
9
SDR Valuation
Valued Gateway Client
Valued Gateway
Recommended
CrystalGraphics Presentations
