1、Multinational Financial Management Alan Shapiro 7th EditionJ.Wiley & Sons,Power Points byJoseph F. Greco, Ph.D.California State University, Fullerton,1,CHAPTER 3,THE INTERNATIONAL MONETARY SYSTEM,2,CHAPTER OVERVIEW,I.ALTERNATIVE EXCHANGE RATE SYSTEMSII.A BRIEF HISTORY OF THE INTERNATIONAL MONETARY S
2、YTEMIII.THE EUROPEAN MONETARY SYSTEM AND MONETARY UNIONIV.EMERGING MARKET CURRENCY CRISES,3,PART I. ALTERNATIVE EXCHANGE RATE SYSTEMS,I.FIVE MARKET MECHANISMSA.Freely Floating (“Clean Float”)1.Market forces of supply and demand determine rates.,4,ALTERNATIVE EXCHANGE RATE SYSTEMS,2.Forces influenced
3、 bya. price levelsb.interest ratesc.economic growth3.Rates fluctuate randomly over time.,5,ALTERNATIVE EXCHANGE RATE SYSTEMS,B.Managed Float (“Dirty Float”)1.Market forces set rates unless excess volatility occurs.2.Then, central bank determines rate.,6,ALTERNATIVE EXCHANGE RATE SYSTEMS,C.Target-Zon
4、e Arrangement1.Rate Determinationa.Market forces constrainedto upper and lower range of rates.b.Members to the arrangementadjust their national economic policies to maintain target.,7,ALTERNATIVE EXCHANGE RATE SYSTEMS,D.Fixed Rate System1.Rate determinationa.Government maintains target rates. b.If r
5、ates threatened, central banks buy/sell currency.c.Monetary policies coordinated.,8,ALTERNATIVE EXCHANGE RATE SYSTEMS,E.Current System1.A hybrid systema.Major currencies:use freely-floating methodb.Other currencies move in and out of various fixed-rate systems.,9,PART II. A BRIEF HISTORY OF THE INTE
6、RNATIONAL MONETARY SYSTEM,I.THE USE OF GOLDA.Desirable propertiesB.In short run: High production costs limit changes.C.In long run: Commodity money insures stability.,10,A BRIEF HISTORY,II.The Classical Gold Standard (1821-1914)A.Major global currencies on gold standard. 1.Nations fix the exchange r
7、ate in terms of a specific amount of gold.,11,A BRIEF HISTORY,2.Maintenance involved the buying and selling of gold at that price.3.Disturbances in Price Levels:Would be offset by the price-specie*-flow mechanism.* specie = gold coins,12,A BRIEF HISTORY,a.Price-specie-flow mechanismadjustments were
8、automatic:1.)When a balance of payments surplus led to a gold inflow;2.)Gold inflow led to higher prices which reduced surplus;3.)Gold outflow led to lower prices and increased surplus.,13,A BRIEF HISTORY,III.The Gold Exchange Standard (1925-1931)A.Only U.S. and Britain allowedto hold gold reserves.
9、B.Others could hold both gold, dollars or pound reserves.,14,A BRIEF HISTORY,C.Currencies devalued in 1931- led to trade wars.D.Bretton Woods Conference- called in order to avoid future protectionist and destructive economic policies,15,A BRIEF HISTORY,V.The Bretton Woods System (1946-1971)1.U.S.$ w
10、as key currency;valued at $1 - 1/35 oz. of gold.2.All currencies linked to that price in a fixed rate system.,16,A BRIEF HISTORY,3.Exchange rates allowed to fluctuate by 1% above or below initially set rates.B.Collapse, 19711.Causes:a.U.S. high inflation rate b.U.S.$ depreciated sharply.,17,A BRIEF
11、HISTORY,V.Post-Bretton Woods System (1971-Present)A.Smithsonian Agreement, 1971:US$ devalued to 1/38 oz. of gold.By 1973: World on a freely floating exchange rate system.,18,A BRIEF HISTORY,B.OPEC and the Oil Crisis (1973-774)1. OPEC raised oil prices four fold;2. Exchange rate turmoil resulted;3. C
12、aused OPEC nations to earn large surplus B-O-P.,19,A BRIEF HISTORY,4. Surpluses recycled to debtor nations which set up debt crisis of 1980s.C.Dollar Crisis (1977-78)1.U.S. B-O-P difficulties2.Result of inconsistent monetary policy in U.S.,20,A BRIEF HISTORY,3.Dollar value falls as confidence shrink
13、s.D.The Rising Dollar (1980-85)1.U.S. inflation subsides as theFed raises interest rates2.Rising rates attracts global capital to U.S.,21,A BRIEF HISTORY,3.Result: Dollar value rises.E.The Sinking Dollar:(1985-87)1.Dollar revaluated slowly downward;2.Plaza Agreement (1985)G-5 agree to depress US$fur
14、ther.,22,A BRIEF HISTORY,3.Louvre Agreement (1987)G-7 agree to support the falling US$.F.Recent History (1988-Present)1.1988 US$ stabilized2.Post-1991 Confidence resulted in stronger dollar3.1993-1995 Dollar value falls,23,PART III.THE EUROPEAN MONETARY SYSTEM,I.INTRODUCTIONA.The European Monetary S
15、ystem (EMS)1.A target-zone method (1979)2.Close macroeconomic policy coordination required.,24,THE EUROPEAN MONETARY SYSTEM,B.EMS Objective:to provide exchange rate stability to all members by holding exchange rates within specified limits.,25,THE EUROPEAN MONETARY SYSTEM,C.European Currency Unit (E
16、CU)a “cocktail” of European currencies with specified weights as the unit of account.,26,THE EUROPEAN MONETARY SYSTEM,1. Exchange rate mechanism (ERM) - each member determines mutually agreed upon central cross rate for its currency.,27,THE EUROPEAN MONETARY SYSTEM,2.Member Pledge:to keep within 15%
17、 margin above or below the central rate.,28,THE EUROPEAN MONETARY SYSTEM,D.EMS ups and downs1. Foreign exchange interventions: failed due to lack of support by coordinated monetary policies.,29,THE EUROPEAN MONETARY SYSTEM,2.Currency Crisis of Sept. 1992a. System broke downb.Britain and Italy forced
18、 towithdraw from EMS.,30,THE EUROPEAN MONETARY SYSTEM,G.Failure of the EMS:members allowed political priorities to dominate exchange rate policies.,31,THE EUROPEAN MONETARY SYSTEM,H.Maastricht Treaty1.Called for Monetary Union by 1999 (moved to 2002)2.Established a single currency:the euro,32,THE EU
19、ROPEAN MONETARY SYSTEM,3.Calls for creation of a singlecentral EU bank4.Adopts tough fiscal standards,33,THE EUROPEAN MONETARY SYSTEM,I.Costs / Benefits of A Single CurrencyA. Benefits1.Reduces cost of doing business2.Reduces exchange rate risk,34,THE EUROPEAN MONETARY SYSTEM,B.Costs1.Lack of nation
20、al monetary flexibility.,35,PART IV. EMERGING MARKET CURRENCY CRISES,Transmission MechanismsA.Trade linkscontagion spreads through tradeB.Financial System-more important transmission mechanism-investors sell off to make up for losses,36,EMERGING MARKET CURRENCY CRISES,Origins of Emerging Market CrisesA.Moral hazardB.Fundamental Policy Conflict,37,EMERGING MARKET CURRENCY CRISES,Policy Proposals for Dealing with Emerging Market CrisesA.Currency ControlsB. Freely Floating CurrencyC.Permanently Fixed Exchange Rate,38,演讲完毕，谢谢观看！,
