Keiser University Brigham and Ehrhardt Discussion – Description
Brigham and Ehrhardt (2022) argue that the international monetary system determines exchange rates between countries. Considering globalization, international business, and foreign direct investment, it is essential to have an international monetary system to facilitate payments.
Brigham and Ehrhardt (2022) further argue that today’s system dramatically differs from the one before 1971. At that time, countries did whatever it took to keep the exchange rate fixed. The Bretton Woods resolved that the International Monetary Fund administers the exchange rate system (IMF). All other currencies are tied to the U.S. dollar, and the U.S. dollar is linked to gold, which sold for $35 an ounce. When fluctuations in demand occurred with any currency, banks stabilized everything back to the fixed exchange rate, whether they purchased or sold their country’s currency. Has the IMF lost its relevance to the world’s wealthiest countries from the literature you have read thus far?
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