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International Monetary Integration

International Monetary Integration. Antony Mueller. Currency Arrangements. Avoiding the volatility of exchange rate movements Currency pegs, currency baskets, asymmetrical and symmetrical arrangements Single currency areas Role of monetary and fiscal policy. European Monetary Integration.

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International Monetary Integration

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  1. International Monetary Integration Antony Mueller

  2. Currency Arrangements • Avoiding the volatility of exchange rate movements • Currency pegs, currency baskets, asymmetrical and symmetrical arrangements • Single currency areas • Role of monetary and fiscal policy

  3. European Monetary Integration • Beginning in the 1950s (Bretton Woods) • 1973 European Monetary System • 1999 Common Currency in Banking • 2002 The Euro as a physical currency • Arrangements: strict independence of European Central Bank, strict orientation to price stability, budget deficit controls, violations

  4. Global reserve currency • Dollar accounts for 65 per cent of global international reserves (weight of US economy about 17 per cent) • Currency diversification is going on into euro, and gold • Asian central bank increased their dollar reserves • New movement into gold observable

  5. Monetary Integration in Latin America • Dominance of US dollar orientation • Dollar orientation is not congruent with trade • Lack of fiscal and monetary control • Trade integration requires monetary integration • Lack of institutions buildings

  6. Regionalism and Globalization • Demise of the nation state? • New global issues (finance, trade, environment, terrorism) • Increased relevance of micro regions along with increased relevance of macro regions • “made by BMW” • Impact on global power structure

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