The international Monetary System is
responsible for economic stability in the world. Some countries are more
developed than others. In order to prevent discrimination of poor
countries by rich countries, the IMF funds developments in the smaller
countries. Best Essays Writers also regulates the exchange rates in all countries
against the USD. This organization is made up of member countries from
all over the world (Dormael, 1978). The International Monetary System is
works to create a common reference point for all the major world
currencies. In 1971, the famous Bretton Woods conference was held in
America to establish a common ground for trade. Previously, huge
economic imbalances had existed in the world. Some countries were more
industrialized than others. Some countries also had serious unemployment
rates compared to others. The conference was intended to find a common
ground for trade. Just after world war two, there was need to streamline
trade. A common level ground could only be realized through the use of a
common currency. This common currency was also to be the reserve money.
Gold was selected to act as a common currency.
The use of Gold for trade created serious imbalances. Gold was used as
the standard mode of currency for a long time until 1971. The use of
gold benefited some countries while discriminating some countries. Gold
became scarce in most parts of the world except USSR. The USA proposed
the dollar as a common currency. This has since been accepted especially
after a gold-dollar conversion ratio was established. The USD has been
used ever since 1971 (Dormael, 1978). The dollar is easy to use. IMF is
responsible for regulating the trade in the world. Some countries need
to be boosted so as to create the balance. The IMF also gives loans to
countries to aid in their development. Such kind of lending is to help
develop infrastructures.
