Page 290 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

International Trade and Finance

Notes international monetary and exchange rates, international cooperation and trade and tariff
negotiations 1971 marked the end of the fixed exchange rate regime when the Bretton Woods
System collapsed. Today we are living in a world of flexible exchange rates. The SDRs are
gradually replacing gold, the US dollar and other reserve assets as a scale of valuation of
international reserves and exchange rates. The Bretton Woods System no longer exists, and no
new system has been created to replace it.
• The IMF is still the main source of international liquidity, and the SDRs constitute a new source
of international liquidity, similar to the discovery of new gold mines.

25.5 Key-Words

1. Monetary System : medium of exchange: anything that is generally accepted as a standard
of value and a measure of wealth in a particular country or region
2. Bretton Wood System : The Bretton Woods system of monetary management established the
rules for commercial and financial relations among the world's major
industrial states in the mid-20th century. The Bretton Woods system
was the first example of a fully negotiated monetary order intended to
govern monetary relations among independent nation-states.
25.6 Review Questions

1. What do you mean by monetary system? Discuss international monetary system.
2. Write a short note on Bretton Wood System.
3. What are the causes of the breakdown of Bretton Wood System? Discuss.
Answers: Self-Assessment

1. (i)(d) (ii)(e) (iii)(a) (iv)(a) (iv)(c)
25.7 Further Readings

1. Krimawati, Wawat. (?) NAFTA: North America Free Trade Agreement. [Accessed
18 May 2009]
2. Vogel, David. (2009) North American Free Trade Agreement. [Accessed 18 May
2009] 2009. North American Free Trade Agreement (NAFTA).
3. United States Department of Agriculture, Foreign Agricultural Service. [Accessed
June 8, 2009]

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