首页
登录
职称英语
Exchange Rates:A Brief History of Exchange Rates For centurie
Exchange Rates:A Brief History of Exchange Rates For centurie
游客
2024-02-13
24
管理
问题
Exchange Rates:A Brief History of Exchange Rates
For centuries,the currencies of the world were backed by gold.That is,a piece of paper currency issued by any world government represented a real amount of gold held in a vault by that government.In the 1930s,the U.S.set the value of the dollar at 8 single,unchanging level:l ounce of gold was worth $35.After World War II,other countries based the value of their currencies on the U.S.dollar.Since everyone knew how much gold a U.S.dollar was worth,then the value of any other currency against the dollar could be based on its value in gold.A currency worth twice as much gold as a U.S.dollar was,therefore,also worth two U.S.dollars.
Unfortunately,the real world of economics outpaced this system.The U.S.dollar suffered from inflation(its value relative to the goods it could purchase decreased),while other currencies became more valuable and more stable.Finally,in 1971,the U.S.took away the gold standard altogether.This meant that the dollar no longer represented an actual amount of a precious substance-market forces alone determined its value.
Today,the U.S.dollar still dominates many financial markets.In fact,exchange rates are often expressed in terms of U.S.dollars.Currently,the U.S.dollar and the euro account for approximately 50 percent of all currency exchange transactions in the world.Adding British pounds,Canadian dollars,Australian dollars,and Japanese yen to the list accounts for over 80 percent of currency exchanges altogether.
Methods of Exchange:the Floating Exchange Rate
There are two main systems used to determine a currency’s exchange rate:floating currency and pegged currency.The market determines a floating exchange rate.In other words,a currency is worth whatever buyers are willing to pay for it.This is determined by supply and demand,which is in turn driven by foreign investment,import/export ratios,inflation,and a host of other economic factors.
Generally,countries with mature,stable economic markets will use a floating system.Virtually every major nation uses this system,including the U.S.,Canada and Great Britain.Floating exchange rates are considered more efficient,because the market will automatically correct the rate to reflect inflation and other economic forces.
The floating system isn’t perfect,though.If a country’s economy suffers from instability,a floating system will discourage investment.Investors could fall victim to wild swings in the exchange rates,as well as disastrous inflation.
Methods of Exchange:the Pegged Exchange Rate
A pegged,or fixed system,is one in which the exchange rate is set and artificially maintained by the government.The rate will be pegged to some other country’s dollar,usually the U.S.dollar.The rate will not fluctuate from day to day.
A government has to work to keep their pegged rate stable.Their national bank must hold large reserves of foreign currency to mitigate changes in supply and demand.If a sudden demand for a currency was to drive up the exchange rate,the national bank would have to release enough of that currency into the market to meet the demand.They can also buy up currency if low demand is lowering exchange rates.
Countries that have immature,potentially unstable economies usually use a pegged system.Developing nations can use this system to prevent out-of-control inflation.The system can backfire,however,if the real world market value of the currency is not reflected by the pegged rate.In that case,a black market may spring up,where the currency will be traded at its market value,disregarding the government’s peg.
When people realize that their currency isn’t worth as much as the pegged rate indicates,they may rush to exchange their money for other,more stable currencies.This can lead to economic disaster,since the sudden flood of currency in world markets drives the exchange rate very low.So if a country doesn’t take good care of their pegged rate,they may find themselves with worthless currency.
Methods of Exchange:Hybrids
In reality,few exchange rate systems are 100 percent floating,or 100 percent pegged.Countries using a pegged rate can avoid market panics and inflationary disasters by using a floating peg.They peg their rate to the U.S.dollar,and that rate doesn’t fluctuate from day to day.However,the government periodically reviews their peg,and makes minor adjustments to keep it in line with the true market value。
Floating systems aren’t really left to the mercy of market forces,either.Governments using floating exchange rates make changes to their national economic policy that can affect exchange rates,directly or indirectly。Tax cuts,changes to the national interest rate,and import tariffs can all change the value of a nation’s currency,even though the value technically floats.
The Euro
On January 1,2002,the euro became the single currency of 12 member states of the European Union-making it the second largest currency in the world(the U.S.dollar being the largest).This was,to date,the largest currency event in the history of the world;twelve national currencies completely disappeared and were replaced by the euro。
Although the euro is fundamentally a tool to enhance political solidarity,it also has the economic effect of unifying the economies of participating countries.Some of the euro’s advantages,in regard to economics,include:
Elimination of exchange-rate fluctuations-the euro eliminates the fluctuations of currency values across certain borders.
Transaction costs-tourists and others who cross several borders during the course of a trip had to exchange their money as they entered each new country。The costs of MI of these exchanges added up significantly.With the euro,no exchanges are necessary within the Euroland countries.
Increased trade across borders-the price transparency,elimination of exchange-rate fluctuations,and the elimination of exchange-transaction costs all contribute to an increase in trade across borders of all the Euroland countries。
Increased cross-border employment-with a single currency,it is less cumbersome for people to cross into the next country to work,because their salary is paid in the same currency they use in their own country. [br] The advantages of the euro include elimination of exchange-rate fluctuations,transaction costs,increased trade across borders,and______.
选项
答案
increased cross-border employment
解析
本题是对使用欧元好处的总结,见文章的最后一个部分第四点,即可得答案。
转载请注明原文地址:https://tihaiku.com/zcyy/3448334.html
相关试题推荐
[originaltext]Atnoothertimeinrecenthistoryhasitbeeneasierorchea
[originaltext]Atnoothertimeinrecenthistoryhasitbeeneasierorchea
[originaltext]Atnoothertimeinrecenthistoryhasitbeeneasierorchea
Archaeologyisasourceofhistory,notjustahumbleauxiliarydiscipline.Arch
Archaeologyisasourceofhistory,notjustahumbleauxiliarydiscipline.Arch
Archaeologyisasourceofhistory,notjustahumbleauxiliarydiscipline.Arch
Archaeologyisasourceofhistory,notjustahumbleauxiliarydiscipline.Arch
Archaeologyisasourceofhistory,notjustahumbleauxiliarydiscipline.Arch
OnCulturalExchange1.如今,各国之间的文化交流越来越频繁2.有人支持,有人质疑3.我的看法
Manyofthepeoplewhoappearmostoftenandmostgloriouslyinhistorybook
随机试题
SustainableDevelopmentandGlobalization
Throughouthistorythebasicunitofalmosteveryhumansocietyhasbeenthe
Therearerareinstanceswhenjusticealmostceasestobeanabstract【C1】___
风险中性化是常用的一种风险财务转移方式,属于此种方式的是()。A.购买建安一
某住宅小区分期开工建设,其中二期5号楼建设单位仍然复制使用-期工程施工图纸。施工
对于继发性肺结核病下述哪一项是恰当的()A.不易形成空洞 B.不经治疗
中药处方中,起到引经药或调和药性作用的是A.君药B.臣药C.佐药D.反佐药E.使
A.癌胚抗原测定 B.补体结合试验 C.诊断性穿刺 D.包虫皮内试验 E
背景 某总承包单位将一医院的通风空调工程分包给某安装单位,工程内容有风系统、水
关于施工专业分包合同的说法,正确的是()。A.分包合同约定的工程变更调整的
最新回复
(
0
)