The Global Money System - Research Paper Example

Global Money System Global Money System Global money system involves an aspect of monetary systems that are set internationally as agreed by monetary rules. These rules are set facilitate cross border investment, reallocation of capital between nations and states as well as internal trade among the co existing unions worldwide. The terms and ways laid down on payment revenue strategies are given so that the sellers and buyers agrees in good terms regardless of their nationality. Global money system therefore works hand in hand with money exchange rates in regards to various currencies existing worldwide.

According to the recent report on the basis of global money system, the group of twenty also known as G20 finger pointed the world currency tensions detailing that the government of America blamed China government which decided to refuse the currency known as Yuan to rise faster. China on other hand suggested that the opinion detailed posed a distortion of global economy hence affecting Yuan currency exchange and was due to loosened monetary policy that was reinforced by the Federal Reserve in regards to government bonds.

From the point of view, a problem has been emerged on the global money system issue due to the laid down rules, norms and institutions that governs currencies facet and the flow of the capital that prevails and trigger market pricing system globally. A global money system involves creations of reserves that fosters and hold vast foreign exchange activities on emerging economies. A dollar has been a dominance currency in this reserves managed by the United States of America for foreign exchange and transactions both within the states and internationally.

Global Money System has generated investment globally that involves lending and hence facilitating financial and volatility of capital flows. Global money system plays a bigger role on the countries economy. When laid down policies are not in power, an aspect of inflation on capital flaws may arise and this comes when a given nation decides to print more money. However, some countries like the United States of America and Japan prefers to import inflation aspect rather than boosting exports that eludes weaker currency; some of the activities that are done through their national central banks.

This usually affects international monetary system hence developing instability on economic system. Global money system policies are therefore monitored by especially national central banks and at large the World Bank. Some of the European countries through their European banks have eased liquidity on their currencies hence developing the country’s economy and global money system policies at large. However, global money system and money making depends on the money paper making, one of the considerate aspect in the monetary policies.

Conclusion In conclusion, Global money system involves an aspect of monetary systems that are set internationally as agreed by monetary rules. A global money system involves creations of reserves that fosters and hold vast foreign exchange activities on emerging economies. Global Money System has generated investment globally that involves lending and hence facilitating financial and volatility of capital flows. However, some countries like the United States of America and Japan prefers to import inflation aspect rather than boosting exports that eludes weaker currency; some of the activities that are done through their national central banks.

ReferencesRavenhill, J. (2005).Global Political economy. United Kingdom: Oxford University Press.