Currency Report: International Currency
Introduction due on OCTOBER 12.
What currency do you want to analyze?
Why you have chosen that currency?: personal interest? personal interest? Financial interest?
What is the time frame: Months, years, Weeks?
That is the time covered: At least 20 years of data
Web page you are getting the data from: See announcement with different web pages
Present the graph to identify possible difficulties
* Analysis: Due TBA
You have to analyze the standing of your chosen currency making sure your elaborate your analysis referring to the following questions:
QUESTION 1. Research the history of your currency to Identify and explain any currency conflicts and currency war, and which were the policy options used to deter the currency conflict (Bergsten and Gagnon)
AS A SUMMARY: please remember we have covered three currency conflicts. All three shared the same path of events:
a background that lead to a currency conflict:
Devaluation or non-appreciation due to a number/series of historical, political and economics situation and cirsncunstances
Government officials that complain and take to solve the currency conflict
How they tried to solve this: which measures were used to solve the currency conflict?
CWI: Monetary policies
CWII: trade policies
CWII: on the making
Was there a currency war despite the efforts?
What was the final outcome?
NOW: Based on this information: QUESTION 1: Was/is your currency part of any of the currency wars (Richards)? If so, please identify dates, reasons, political and economic debates, outcomes.
Please explain if your currency/country engaged in any currency conflict
Was it a competitive devaluation or a non-appreciation of the value?
Time period
percentage
Effects on the economy of both countries: employment/unemployment, trade balance, inflation.
who/government official in charge of solving the issue?
Which policies were used? Fiscal, monetary, trade, unilateraly, multilateraly
How long did it last?
Any agreements signed? how was this conflic/wart solved?
What do you think about the handeling of the currency conflict/war? what would you have done differently?
QUESTION 2: Is your currency consider an international currency? (Cohen chapter 1 and Cohen Chapter 4)
a. Referring to Cohen Chapter 1 and chapter 4 please answer these question:
what is an International currency? Please use the readings to define it.
What are the motivation to become international? please use the readings to explain it
How is the internalization process? please refer to the readings
How does the Gresham's law applies? please refer to the readings
What are the Political and economic factors that help with the internalization process? Please refer to the readings
b. IS YOUR CURRENCY an international currency?
If Yes: Explain why
If No: Explain why and identify the reason/s why your currency is not considered an international currency
Non-full currency body, inconvertible, appeal? please explain
QUESTIONS 1: DUE ON NOV 2.
QUESTION 2: Due NOV 9
QUESTION 3. How is your currency financing international trade? ( Cohen Chapter 4 and Eichengreen et al. chatper ....)
QUESTION 4. How/what is the status of your currency as a reserve currency? (Cohen Chapter 4 & Eichengreen et al. chapters....)
* Conclusions and Final words
Please present your thoughts on how do you think has been the handling of the currency crisis and/or war and what would you have done differently and why.
* Work Cited
This is a research paper and, in order to avoid plagiarism, please make sure you cite your sources both in-text and in the bibliography.
Student's Name:
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International Currency
International currency is a means of exchange between different countries or states. Cohen (2018) defines currency from the understanding of power and authority. The power of control from the issuing country and the receiving country. It is a measure of economic and political standing in the world, the border access levy. If the country or state enjoys economic and political relations, they check on what each other will gain in trade and exchange of financial services. The value of a currency is considered great if the issuing country possesses the power of significant economic and diplomatic influence. The value by currency internationalization refers to the capacity to gain leverage or influence other states. This marks the role played by international currency in financial markets, central reserves, and trade. Thus, global currency as a defining factor is the power used to influence other states or countries or be influenced. There has to be a monetary value attached to this to control the exchange of goods and services.
The Motivations to Become International
Most countries are motivated to become international because of the apparent reasons to hold money. These stretch from the accounts' units, the medium of exchange, store of value, investment purposes, trade invoicing, foreign exchange trading, or trade settlement. Other than the pathway to gaining relations between different nations, there is a hierarchical relationship among countries. To a more significant pedigree, countries gather motivation to go international to achieve economies of scale. Monetary exchange reduces the expenses associated with search and bargaining, as was used in the earlier years during barter trade. Large volumes of the transaction can be done via a single currency to reduce the costs of conversion. Conversions take time as financial institutions strain to gather the most relevant information about coins daily. Currency internationalization is essential in improving money as a unit of account and a commercial medium of exchange. Thus, it broadens its appeal for its functional store of value. Interest rates vary in different countries, and countries hold on to this as an investment in foreign exchanges. When money is used widely in the private sector, the government and its relevant machinery employ it as an anchor for exchange rates, a reserve currency, and an intervention medium.
Internationalization Process
Not all the countries or states meet realism, that is, the demanding economic qualification and political qualification necessary for currency internationalization. Such links to the competitive nature of countries in the political and economic arenas. With these, currencies face the threat of disqualification if it does not meet the fundamental functions of money and a broader diplomatic influence by their parent states of origin. Special Drawing Rights and International Monetary Fund must be available to be used as a medium of exchange. For a country to be internationalized, it must trade with a bloc member beyond its borders. A growing number of trade partners means improving currency strength. The currency in the reference should have a scale of conversion with that of the states they trade with. An example is the Dollar and the Pound, which have a reference scale for conversion from one to another. Some countries may fail to meet the international market's qualifications due to underlying issues like diverse inflation rates, lack of sufficient depth, and financial markets' liquidity. Others lack the wherewithal to project power effectively within their political systems.
Application of Gresham's law
In a competitive market, the wrong currency drives out the good ones. It is generally an argument against bimetallism and the competitive production of money, and the substitution of paper money for metallic money. According to this theory, excellent and bad money cannot be traded together internationally. In the world's economy, the monetary rivalry is always observed. There is competition between international currencies through politics and affects the global b...