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International Finance TY BMS Gold Standard Systems Prof. Dipak Abhyankar 9820321404 PowerPoint Presentation
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International Finance TY BMS Gold Standard Systems Prof. Dipak Abhyankar 9820321404

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International Finance TY BMS Gold Standard Systems Prof. Dipak Abhyankar 9820321404 - PowerPoint PPT Presentation

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International Finance TY BMS Gold Standard Systems Prof. Dipak Abhyankar 9820321404

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  1. International Finance TY BMS Gold Standard Systems Prof. Dipak Abhyankar 9820321404

  2. Note • Be sure that the speakers are on!

  3. Exchange Rate Regimes Dipak Abhyankar

  4. Barter System Advantage • No Government Intervention • No Paper Currency • No ‘managed’ inflation

  5. Barter System Limitations • Divisibility

  6. Barter System Limitations • Divisibility • Stocking Value for long

  7. Barter System Limitations • Divisibility • Stocking value for long • Fair price discovery

  8. Clay Tablets Experiments …… Sea Shells Precious Stones

  9. Gold and Silver Monometalism Bimetallism

  10. Gold Standard Systems Gold Specie Standard Actual Use of Gold Coins

  11. Gold Specie Standard Actual Use of Gold Coins Advantages People are using real value No certification required Exchange Rate is simple and stable =

  12. Gold Specie Standard Actual Use of Gold Coins Limitations • Larger Space requirement for stocking • Inconvenient to Carry • Risk of Theft

  13. Gold Specie Standard

  14. Gold Specie Standard

  15. Gold Bullion Standard

  16. Gold Bullion Standard Pegged Currency is ‘pegged’ with Gold with a specified quantity

  17. Gold Bullion Standard Pegged Unconditional Promise to convert Fiat Currency to Gold

  18. Gold Bullion Standard Advantages • Controlled Money Supply • Anti Inflationary • Exchange Rate is simple and stable • Carries advantages of Divisibility, Stocking of credits and easier pricing Pegged

  19. Gold Bullion Standard Disadvantages • Inflationary measures are not possible, and hence full employment and growth objectives are not achieved • Difficult to honor unconditional promise in war and crisis Pegged

  20. Gold Exchange Standard Currency A Currency B • Currency in Gold Exchange Standard is pegged with another currency with specified equation [Currency ‘B’] • That another Currency is pegged with gold[Currency ‘A’] Pegged • Currency ‘B’ is in Gold exchange standard • Currency ‘A’ is in Gold Bullion Standard

  21. Gold Standard Systems • Gold Specie Standard • `Actual Use of Gold Coins • Gold Bullion Standard • Paper (Fiat) Currency Pegged with Gold • Gold Exchange Standard • Paper (Fiat) Currency pegged with another currency which in turn is pegged with Gold

  22. Money is a headache • and Money is the cure