Organizing the World's Money: The Political Economy of International Monetary Relations

Organizing the World's Money: The Political Economy of International Monetary Relations

Organizing the World's Money: The Political Economy of International Monetary Relations

Organizing the World's Money: The Political Economy of International Monetary Relations

Excerpt

This book is about international monetary relations. Specifically, it is about the international monetary order—the framework of rules, regulations, conventions, and norms governing the foreign financial conduct of nations. The focus of the book is on the problem of how to organize the international monetary order.

Analytically, the international monetary order should be distinguished from the international monetary system. A system is "an aggregation of diverse entities united by regular interaction according to some form of control." In the context of international monetary relations, this definition applies to the aggregation of individuals, commercial and financial enterprises, and governmental agencies that are involved, either directly or indirectly, in the transfer of purchasing power between countries. The international monetary system exists because, like the levying of taxes and the raising of armies, the creation of money is widely acknowledged as one of the fundamental attributes of political sovereignty. Virtually every state issues its own currency; within the national frontiers, no currency but the local currency is generally accepted to serve the three traditional functions of money—medium of exchange, unit of account, and store of value. Consequently, across national frontiers some integrative mechanism must exist to facilitate interchanges between local money systems. That mechanism is the international monetary system.

The international monetary order, by contrast, is the legal and conventional framework within which this mechanism of interchange operates—the set of governing procedures to which the . . .

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