Essay on "International Politics Economics"
Essay 4 pages (1375 words) Sources: 4 Style: APA
[EXCERPT] . . . .
International Political EconomicsThe international financial system has changed significantly over the past thirty years. Among the most significant changes, the Bretton Woods system collapsed, regulations regarding transborder capital flows have eased and the Euro was created. Each of these major changes has contributed significantly to the global financial system we have today.
The Bretton Woods system was devised in the wake of the Second World War and was based on pegging the world's major currencies to the value of gold. The pegs were to be within 1%. By 1968, Bretton Woods had been adapted to a floating rate system. The U.S. dollar, the reserve currency under Bretton Woods, was unable to maintain its peg. The U.S. dollar became overvalued in relation to gold.
The Smithsonian Agreement of 1971 ended the gold pegs for good. The U.S. had unilaterally ended the gold standard the year prior. This agreement set the stage for the development of international currency markets. The first stage, however, saw exchange rates negotiated, rather than be backed by the value of silver or gold (Investopedia, 2009).
Once the free float of major currencies was established, the next step in the development of global financial markets was the freeing of global financial flows. International trade agreements have been signed at an increasingly rapid pace since the U.S. And Canada signed the first major free trade act. While the flow of goods has improved as a result of these agreements, the flow of capital has freed the most. This impacts the world's financial system in a number of ways. The first is that it increases the efficiency of resource
download full paper ⤓
Another major change in the global finance system is the creation of the Euro. When the U.S. dollar began to lose prominence in the 1970s, the other major world currencies were all in smaller economies. They were important, but never a threat to supercede the preeminence of the dollar. The euro absorbed some of these powerful currencies, such as the mark and the franc, and became a world currency in its own right. The euro provides global financial markets a realistic, viable alternative to the dollar, the first real one since the pound prior to World War Two (Pollard, 2001).
As yet, the euro has not superceded the dollar as the primary medium of exchange in the global financial markets. That it provides a viable second option is of comfort to investors, however. It provides stability to the global financial system as well, since investors need not focus exclusively on the dollar as a safe haven. They can move between the euro and the dollar, which increases the efficiency of the global financial markets and helps to normalize the price of both of these currencies.
The final major change in the global financial markets is the increase in the use of derivatives. The increasing use of derivatives has been hotly debated. Proponents take the view that they help hedge against risk, thus improving the efficiency and effectiveness of the international financial system; others argue that derivatives are dangerous and that the use of leverage distorts markets and leads to excessive speculation (Sheppard, 2004). In either case, derivative instruments are here to stay, and have had a significant impact on the global financial system.
One emerging issue that may become the major issue of the next decade or so is the ongoing soft peg of the yuan to the dollar. This is creating an egregious distortion of the market for the yuan, resulting in a massive wealth transfer to China that may well destabilize the global financial system when a free float of the yuan is finally allowed.
2. There are a handful of characteristics that define the classic socialist system. The central government has a monopoly on all resources, and often on retailing as well. This leads to an excess of bureaucratic control. Budgets are soft, since the value of the currency is not likely to… READ MORE
Quoted Instructions for "International Politics Economics" Assignment:
Essay format that will answer the following two questions, (2 pages per question)
1. Over the last 30 years, the global finance system has changed significantly. In an essay format answer, you are to discuss the major changes to the international finance system. You should include a discussion that highlights the collapse of the Bretton Woods system to the Dollar versus the Euro period
2. The collapse of the former Soviet Union was the political earthquake of the latter half of the 20th century.
--- First, what are the essential characteristics of the classical socialist state?
--- Second compare and contract economic and political reforms in Russia and Eastern Europe since the collapse of the Soviet Union.
--- And, third discuss how China has address economic reform while maintaining a political socialist state.
How to Reference "International Politics Economics" Essay in a Bibliography
“International Politics Economics.” A1-TermPaper.com, 2009, https://www.a1-termpaper.com/topics/essay/international-political-economics/990180. Accessed 1 Jul 2024.
Related Essays:
International Political Economics the Impact of UN Peacekeeper Corruption Term Paper
![Paper Icon](https://www.a1-termpaper.com/images/term-paper-3.png)
International Political Economics: The Impacts of UN Peacekeeper Corruption
International political economy tries to understand global and international problems through a diverse interdisciplinary arrangement of theoretical perspectives and analytical tools.… read more
Term Paper 15 pages (4412 words) Sources: 15 Topic: Government / Politics
International Political Economy in the U.S Term Paper
![Paper Icon](https://www.a1-termpaper.com/images/term-paper-3.png)
International Political Economy in the U.S.
Political economy has become two artificially diverse things, political study and economics. However the seeds of political success always lie in the success of… read more
Term Paper 7 pages (2671 words) Sources: 5 Style: MLA Topic: Economics / Finance / Banking
International Trade Role of Leadership Research Proposal
![Paper Icon](https://www.a1-termpaper.com/images/term-paper-3.png)
International Trade
Role of leadership in International trade: Appointment of WTO head Roberto Azevedo
The author has presented the theories of international trade and theoretical positions that researchers have taken… read more
Research Proposal 7 pages (2273 words) Sources: 1+ Style: MLA Topic: Economics / Finance / Banking
International Relations the International System and Global Term Paper
![Paper Icon](https://www.a1-termpaper.com/images/term-paper-3.png)
International Relations
The International System and Global Integration
Relations between states and their institutions lie at the heart of the dilemma of global integration. Whether represented by individual governments, private… read more
Term Paper 4 pages (1353 words) Sources: 4 Style: MLA Topic: Economics / Finance / Banking
Economic Miracle Post War Term Paper
![Paper Icon](https://www.a1-termpaper.com/images/term-paper-3.png)
Economic Miracle: Japan 1946-1973
Japan lies in the Eastern Coast of Asia between the Pacific Ocean and the Sea of Japan (Ministry of Foreign Affairs 2007). Its total land area… read more
Term Paper 8 pages (2610 words) Sources: 3 Style: APA Topic: Economics / Finance / Banking
Mon, Jul 1, 2024
If you don't see the paper you need, we will write it for you!
We can write a new, 100% unique paper!