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In the current essay I will review how globalization and liberal economic ideas influenced today’s monetary structure. It is essential to note that globalization is the process of global economic, political and cultural integration and unification. The monetary system that is influenced by globalization is a kind of organization in the country of cash flow, established statewide laws. These laws define the basic principles, rules, regulations and other requirements, which govern the relationship between the subjects of cash flow. Given the important role of monetary relations in the economic life of society in all countries, whatever the hierarchical level it is exercised, regardless of their devices, the development of monetary systems make the central government, as described in Globalization. Today, there is a strong impact from the internationalization that exists among the countries, and the current trends that push businesses to be international and develop faster. Monetary system has also been influenced by globalization.
Globalization has changed many stereotypes and it has invented new trends in the world economy. It is essential to note that world money – is the main link in the international monetary system.
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They are a logical extension of domestic money, the highest form of their functional use. The first world money, yet comply with all relevant functions were precious metals, are mainly gold and silver. But gradually they were substituted by domestic and international exchange and replaced the national currencies which act as international money. Trends towards greater use of national currencies in international economic relations are a reflection of the international division of labor, the increasing rejection of the ideas of autarky and isolationism, the fact of recognition of each nation-state economic system, an integral part of the world economy, as described in Financial structure and aggregate economic activity: an overview.
The growing internationalization of production in all spheres of economic life is the need for closer adequate to the above processes, the international monetary coordination. International money is used for the assessment and mediation of international trade transactions, which are the export and import of goods, services, capital, etc. In this case, it performs the same function as the national currency, which is the measure of value and scale of prices, means of payment and savings.
The most common international trade currency is the U.S. dollar, with the help of which there is almost two thirds of international trade. About 16% of world trade is carried out in DM, 6% in British pounds, about 5% of the French franc, 4% in Japanese yen, and 6-7% in the currencies of other developed countries. At the same time the U.S. dollar is also an important international reserve currency, because it is a crucial part of the international foreign exchange intervention, as stated in Globalization.
It should be noted that the entire global financial system with its main elements is subject to the general trends of the world economy, the primary of which is globalization. IMF experts to define this process as a growing economic interdependence of countries around the world as a result of the increasing volume and variety of international transactions in goods, services and global capital flows, as well as due to more rapid and broad diffusion of technology, as stated in Globalization.
Globalization can be seen as a process or even as a tool, but the economic result sought by the capital, is economic growth. If globalization is necessary for this medium, the condition for accelerated economic growth have always had access to resources – financial, natural, human. Another resource – perhaps the most important – is the access to markets. The struggle for control over resources was carried out continuously, does not stop it now. It results in its capital with the nation-state, that is, through political means, as described in Is Our Monetary Structure a Systemic Cause for Financial Instability?
It is rather obvious that the globalization of national economies has become a part of the global market economy and, consequently, smoothes the legal institutional and technological barriers. The economic world is taking on the traits of integrity on a global scale. Globalization in a macroeconomic perspective that means a representation of the world as interconnected, interdependent, largely integrated market, which has no borders, and to separate financial services – everywhere convergence, similarity and, finally, the identity of one and the same time of its characteristics as price and quality, as described in Globalization.
All in all, it should be noted that globalization and liberal ideas have influenced the today’s monetary structure and modern trends. There have been invented new rules on the international level, and they have made a world market adapt to the current rules and follow them. Globalization boosts world economy and leads to economic growth of transnational corporations and international business.