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Monetary System (monetary + system)
Kinds of Monetary System Selected AbstractsThe international monetary system in the last and next 20 yearsECONOMIC POLICY, Issue 47 2006Barry Eichengreen SUMMARY The evolution of exchange rate regimes The last two decades have seen far-reaching changes in the structure of the international monetary system. Europe moved from the European Monetary System to the euro. China adopted a dollar peg and then moved to a basket, band and crawl in 2005. Emerging markets passed through a series of crises, leading some to adopt regimes of greater exchange rate flexibility and others to rethink the pace of capital account liberalization. Interpreting these developments is no easy task: some observers conclude that recent trends are confirmation of the ,bipolar view' that intermediate exchange rate arrangements are disappearing, while members of the ,fear of floating school' conclude precisely the opposite. We show that the two views can be reconciled if one distinguishes countries by their stage of economic and financial development. Among the advanced countries, intermediate regimes have essentially disappeared; this supports the bipolar view for the group of countries for which it was first developed. Within this subgroup, the dominant movement has been toward hard pegs, reflecting monetary unification in Europe. While emerging markets have also seen a decline in the prevalence of intermediate arrangements, these regimes still account for more than a third of the relevant subsample. Here the majority of the evacuees have moved to floats rather than fixes, reflecting the absence of EMU-like arrangements in other parts of the world. Among developing countries, the prevalence of intermediate regimes has again declined, but less dramatically. Where these regimes accounted for two-thirds of the developing country subsample in 1990, they account for a bit more than half of that subsample today. As with emerging markets, the majority of those abandoning the middle have moved to floats rather than hard pegs. The gradual nature of these trends does not suggest that intermediate regimes will disappear outside the advanced countries anytime soon. , Barry Eichengreen and Raul Razo-Garcia [source] Book Reviews: Financial Crises, Liquidity, and the International Monetary SystemECONOMICA, Issue 282 2004Ronald I. McKinnon No abstract is available for this article. [source] Multivariate GARCH Modeling of Exchange Rate Volatility Transmission in the European Monetary SystemFINANCIAL REVIEW, Issue 1 2000Colm Kearney C32/F31/G15 Abstract We construct a series of 3-, 4- and 5-variable multivariate GARCH models of exchange rate volatility transmission across the important European Monetary System (EMS) currencies including the French franc, the German mark, the Italian lira, and the European Currency Unit. The models are estimated without imposing the common restriction of constant correlation on both daily and weekly data from April 1979,March 1997. Our results indicate the importance of checking for specification robustness in multivariate Generalized Autoregressive Conditional Heleroskedasticity (GARCH) modeling, we find that increased temporal aggregation reduces observed volatility transmission, and that the mark plays a dominant position in terms of volatility transmission. [source] Towards regional monetary cooperation in East Asia: lessons from other parts of the worldINTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 2 2005Masahiro Kawai Abstract This paper discusses regional monetary cooperation for East Asia, by drawing lessons from the European Payments Union, the CFA Franc Zone and the Arab Monetary Fund. Along with the well-known experience of the European Monetary System, these experiences suggest that effective monetary cooperation should include: (1) a surveillance mechanism; (2) a regional financing facility; (3) a common unit of account; and (4) exchange rate coordination. In East Asia, the existing mechanisms of regional surveillance must be strengthened, and the liquidity support mechanism under the Chiang Mai Initiative must evolve into a common pool of foreign exchange reserves. Over the longer term, the region may need to create its own common unit of account and to develop a framework for exchange rate coordination. Copyright © 2005 John Wiley & Sons, Ltd. [source] Cointegration, Efficiency and Forecasting in the Currency MarketJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 1-2 2001Wilson H. S. Tong Existing literature on using the cointegration approach to examine the efficiency of the foreign exchange market gives mixed results. Arguments typically focus on econometric testing techniques, with fractional cointegration being the most current one. This paper tries to look at the issue from an economic perspective. It shows that the cointegrating relationship, whether cointegrated or fractionally cointegrated, is found mainly among the currencies of the European Monetary System which are set to fluctuate within a given range. Hence, there is no inconsistency with the notion of market efficiency. Yet, exploiting such a cointegrating relationship is helpful in currency forecasting. There is some evidence that restricting the forecasting model to consist of only cointegrated currencies improves forecasting efficiency. [source] Further Evidence on PPP Adjustment Speeds: the Case of Effective Real Exchange Rates and the EMS,OXFORD BULLETIN OF ECONOMICS & STATISTICS, Issue 4 2003Ivan Paya Abstract Two different approaches intend to resolve the ,puzzling' slow convergence to purchasing power parity (PPP) reported in the literature [see Rogoff (1996), Journal of Economic Literature, Vol. 34.] On the one hand, there are models that consider a non-linear adjustment of real exchange rate to PPP induced by transaction costs. Such costs imply the presence of a certain transaction band where adjustment is too costly to be undertaken. On the other hand, there are models that relax the ,classical' PPP assumption of constant equilibrium real exchange rates. A prominent theory put together by Balassa (1964, Journal of Political Economy, Vol. 72) and Samuelson (1964 Review of Economics and Statistics, Vol. 46), the BS effect, suggests that a non-constant real exchange rate equilibrium is induced by different productivity growth rates between countries. This paper reconciles those two approaches by considering an exponential smooth transition-in-deviation non-linear adjustment mechanism towards non-constant equilibrium real exchange rates within the EMS (European Monetary System) and effective rates. The equilibrium is proxied, in a theoretically appealing manner, using deterministic trends and the relative price of non-tradables to proxy for BS effects. The empirical results provide further support for the hypothesis that real exchange rates are well described by symmetric, nonlinear processes. Furthermore, the half-life of shocks in such models is found to be dramatically shorter than that obtained in linear models. [source] Downhill from devaluation: The battle for sterling, 1968,721ECONOMIC HISTORY REVIEW, Issue 3 2007MICHAEL J. OLIVER SUMMARY The devaluation of 1967 and the float of 1972 have become two of the key cornerstones in the analysis of sterling under the Bretton Woods system. Sterling's fortunes between 1968 and 1972 have not been so well documented. This article uncovers new evidence about the pound for this period, including the British government's contingency plans for blocking the sterling balances as a means to negate the weakness of sterling following the 1967 devaluation, the discussions with the United States on the reform of the international monetary system, and the preparations made for floating the pound. [source] The international monetary system in the last and next 20 yearsECONOMIC POLICY, Issue 47 2006Barry Eichengreen SUMMARY The evolution of exchange rate regimes The last two decades have seen far-reaching changes in the structure of the international monetary system. Europe moved from the European Monetary System to the euro. China adopted a dollar peg and then moved to a basket, band and crawl in 2005. Emerging markets passed through a series of crises, leading some to adopt regimes of greater exchange rate flexibility and others to rethink the pace of capital account liberalization. Interpreting these developments is no easy task: some observers conclude that recent trends are confirmation of the ,bipolar view' that intermediate exchange rate arrangements are disappearing, while members of the ,fear of floating school' conclude precisely the opposite. We show that the two views can be reconciled if one distinguishes countries by their stage of economic and financial development. Among the advanced countries, intermediate regimes have essentially disappeared; this supports the bipolar view for the group of countries for which it was first developed. Within this subgroup, the dominant movement has been toward hard pegs, reflecting monetary unification in Europe. While emerging markets have also seen a decline in the prevalence of intermediate arrangements, these regimes still account for more than a third of the relevant subsample. Here the majority of the evacuees have moved to floats rather than fixes, reflecting the absence of EMU-like arrangements in other parts of the world. Among developing countries, the prevalence of intermediate regimes has again declined, but less dramatically. Where these regimes accounted for two-thirds of the developing country subsample in 1990, they account for a bit more than half of that subsample today. As with emerging markets, the majority of those abandoning the middle have moved to floats rather than hard pegs. The gradual nature of these trends does not suggest that intermediate regimes will disappear outside the advanced countries anytime soon. , Barry Eichengreen and Raul Razo-Garcia [source] The revived Bretton Woods systemINTERNATIONAL JOURNAL OF FINANCE & ECONOMICS, Issue 4 2004Michael P. Dooley Abstract The economic emergence of a fixed exchange rate periphery in Asia has re-established the United States as the centre country in the Bretton Woods international monetary system. We argue that the normal evolution of the international monetary system involves the emergence of a periphery for which the development strategy is export-led growth supported by undervalued exchange rates, capital controls and official capital outflows in the form of accumulation of reserve asset claims on the centre country. The success of this strategy in fostering economic growth allows the periphery to graduate to the centre. Financial liberalization, in turn, requires floating exchange rates among the centre countries. But there is a line of countries waiting to follow the Europe of the 1950s/60s and Asia today, sufficient to keep the system intact for the foreseeable future. Copyright © 2004 John Wiley & Sons, Ltd. [source] Dollar Dominance, Euro Aspirations: Recipe for Discord?JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 4 2009BENJAMIN J. COHEN After nearly a century of dominance of the international monetary system, has the US dollar finally met its match in the euro? When Europe's economic and monetary union (EMU) came into existence in 1999, many observers predicted that the euro would soon join America's greenback at the peak of global finance. Achievements, however, have fallen short of aspiration. After an initial spurt of enthusiasm, international use of the euro actually appears now to be levelling off, even stalling, and so far seems confined largely to a limited range of market sectors and regions. The euro has successfully attained a place second only to the greenback , but it remains, and is likely to remain, a quite distant second without a determined effort by EMU authorities to promote their money's global role. The temptation will surely be great. In practical terms, it is difficult to imagine that EMU authorities will refrain entirely from trying to promote a greater role for the euro. But that, in turn, could turn out to be a recipe for discord with the United States, which has never made any secret of its commitment to preserving the greenback's worldwide dominance. A struggle for monetary leadership could become a source of sustained tensions in US,European relations. Fortunately, however, there seems relatively little risk of a destabilizing escalation into outright geopolitical conflict. [source] A small monetary system for the euro area based on German dataJOURNAL OF APPLIED ECONOMETRICS, Issue 6 2006Ralf Brüggemann Previous euro area money demand studies have used aggregated national time series data from the countries participating in the European Monetary Union (EMU). However, aggregation may be problematic because macroeconomic convergence processes have taken place in the countries of interest. Therefore, in this study, quarterly German data until 1998 are combined with data from the euro area from 1999 until 2002 and these series are used for fitting a small vector error correction model for the monetary sector of the EMU. A stable long-run money demand relation is found for the full sample period. Moreover, impulse responses do not change much when the sample period is extended by the EMU period provided the break in the extended data series is captured by a simple dummy variable. Copyright © 2006 John Wiley & Sons, Ltd. [source] The Empirics of International Currencies: Network Externalities, History and Persistence,THE ECONOMIC JOURNAL, Issue 537 2009Marc Flandreau Using a new database for the late nineteenth century, when the pound sterling was the world's leading international currency, this article provides evidence on the empirical determinants of international currency status. We report evidence in favour of the search-theoretic models to international currencies. Using a microeconomic model of currency choice, we provide empirical support to strategic externalities. We find strong confirmation of the existence of persistence, but reject the view that the international monetary system was subject to pure path dependency and lock-in effects, suggesting that, even in the absence of WWI, the USD was bound to overtake sterling. [source] Vietnam and East Asian Monetary Cooperation: Efforts and PoliciesASIAN POLITICS AND POLICY, Issue 3 2009Le Thi Thuy Van The article focuses on Vietnam's participation in East Asian monetary cooperation. It argues that monetary cooperation is necessary for the regional countries, including Vietnam. Perspectives on regional monetary cooperation are considered with the Chiang Mai Initiative in the short term, and an Asian monetary system, Asian monetary fund, and Asian monetary union in the medium and long terms. More important, the author emphasizes Vietnam's efforts and policies in this cooperation. Vietnam has done a great deal to support East Asian monetary cooperation by joining many working groups within the context of ASEAN+3. However, more economic reforms should be undertaken to further upgrade Vietnam's participation in regional monetary cooperation. The author finally makes some recommendations that will help Vietnam's policy makers strengthen the country's participation in East Asian monetary cooperation. [source] | |||||||||||||||||||||||||