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The International Monetary System

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The International Monetary System

Where Are We and Where Do We Need to Go?

IMF,

15 min read
10 take-aways
Audio & text

What's inside?

Financial experts offer ways to reform the crisis-prone international monetary system.

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Editorial Rating

8

Qualities

  • Analytical
  • Scientific
  • Eye Opening

Recommendation

International Monetary Fund (IMF) advisers Rakesh Mohan, Michael Debabrata Patra and Muneesh Kapur do an outstanding job of analyzing the factors that have led to recurrent financial crises in the international monetary system (IMS). They examine proposals to reform the IMS from the point of view of emerging economies and underline the interrelationships among the world’s economies. Their working paper also examines the IMF’s role and offers ideas on how it could be more effective. This short dissertation packs in a lot of information and analysis, making it both thought-provoking and, sometimes, challenging. getAbstract recommends this incisive study to executives of international firms, policy makers, economists and students of international finance.

Summary

Crisis Prone

Policy makers from around the world understand the need to reform the crisis-prone international monetary system (IMS), particularly since the financial crisis of 2008 highlighted its major weaknesses. In a now-familiar cycle, banks and investors flood certain markets with capital and just as easily pull their money out. This causes increased volatility and stress, and rapid shifts in investor confidence. In fact, the system is still struggling to recover from the ongoing stress of the 2008 crisis. In May 2013, when the US Federal Reserve hinted that it would contract its monetary easing, markets around the globe again spasmed. Governments, international agencies and economists have made several suggestions to reform the IMS. But emerging and developing economies (EDEs) must evaluate these proposals from their own points of view.

Promoting Trade and Exchange

“International monetary system” is not a synonym for “global financial system.” The IMS consists of “the set of official arrangements that regulate key dimensions of the balance of payments.” Its goal is to add stability and growth to the global economy by promoting trade and exchange in “...

About the Authors

Rakesh Mohan is an executive director of the International Monetary Fund (IMF). Muneesh Kapur is an IMF adviser. Michael Debabrata Patra is a career central banker with the Reserve Bank of India.

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