monetary system


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monetary system

the assets which make up a country's MONEY SUPPLY and the institutions involved in deposit-taking, money transmission and the provision of credit facilities, together constitute the monetary side of the ECONOMY.

The money supply consists of a number of assets (banknotes, coins etc.), denominated in terms of MONETARY UNITS (pounds and pence in the case of the UK). The institutions involved in handling money include various BANKS, FINANCE HOUSES, BUILDING SOCIETIES etc. The monetary system of a country is controlled by its CENTRAL BANK which uses a number of techniques to regulate the supply of money and interest rates (see MONETARY POLICY).

The monetary system also has an external dimension in that participation by countries in INTERNATIONAL TRADE and FOREIGN INVESTMENT requires the establishment of interactive mechanisms such as EXCHANGE RATES and INTERNATIONAL RESERVES. See INTERNATIONAL MONETARY FUND.

monetary system

the policies and instruments employed by a country to regulate its MONEY SUPPLY. The physical form of the money supply (bank notes, coins, etc.), the denomination of the values of monetary units (pounds and pence, etc.) and the total size of the money supply are basic policy issues.

The instruments that can be used to control the money supply include OPEN MARKET OPERATIONS, SPECIAL DEPOSITS, DIRECTIVES and INTEREST RATES.

The monetary system also has an external dimension insofar as countries engage in international trade and investment, which involve interactive mechanisms such as the EXCHANGE RATE, CONVERTIBILITY and INTERNATIONAL RESERVES. See also MONETARY POLICY, INTERNATIONAL MONETARY SYSTEM.

References in periodicals archive ?
Part I discusses the economic theories of the international monetary system and starts with the paper entitled "The International Monetary System and the Global Financial Integration" by Asim Kumar Karmakar and Sebak Kumar Jana in which they postulate the interesting thesis that currency crises, banking crises, systemic financial crisis and foreign debt crisis are ultimately the result of the instability of the international monetary system in the context of globalization and distorting action of supranational organizations like the IMF which are subject to moral hazard problems.
This case of Britain shows very clearly the close relationship of gold, currency and the international monetary system.
It is clear that the current dollar-based international monetary system needs to evolve," said Joseph El Fadl partner in charge for the Financial Services Industry (FSI) at Deloitte in the Middle East.
We have yet to fix the current international monetary system - which fails to address issues such as large and volatile capital flows, undue exchange rate pressures, and disruptions in providing sufficient global liquidity in times of market distress," Mr Kuroda said.
Spivey on the need "to abolish socialist world government institutions such as the IMF, World Bank, NAFTA, WTO, and the UN," and to "repeal government regulations, and return to a sound monetary system based on gold or silver.
The question raised by the subplot of Cryptonomicon set in 1999 is even more troubling: What happens when you establish a monetary system that does not depend on government and that does not lend itself easily to government tracking and supervision?
Moreover, it would help overcome two of the key problems--or, to use the recent image of British Prime Minister Major, "fault lines"--that have blighted the European Monetary System, the existing arrangement to link European currencies together.
The United States did agree to examine the case for a more thorough reform of the international monetary system, which led to the establishment in 1972 of the Committee on Reform of the International Monetary System and Related Issues (the Committee of Twenty, or C-20).
Cooper suggests several ways for improving the international monetary system.
He describes why the international monetary system is responsible for the global financial crisis and how China needs to develop new models to meet its development needs.
The report, Euro, Dollar, Yuan Uncertainties: Scenarios on the Future of the International Monetary System, warns international monetary stability is at risk due to uncertain future international roles of these currencies, while policy choices within each currency area could radically alter global patterns of trade and capital movement.
The international monetary system has become an increasingly unstable hybrid system.