Discussion. Global Managerial economics. Management Essay. (Essay Sample)
In 1944, finance specialists and bankers from around the world met to discuss what the post-WWII monetary system would be. Given the instability of the pre-war period, the goal was to create a new system. The outcome of this was the Bretton Woods system, which had the U.S. dollar as the world reserve currency linked to gold at $35 an ounce. All other currencies were tied to the dollar with limits on how much they could appreciate or depreciate. The system lasted until the 1970s, when the United States decided to move away from gold convertibility. The modern system is based on supply and demand for currency and a managed float. Discuss the following in your main post:
The U.S. dollar remains the world's reserve currency. Is this good for the United States, and if so, why?
People usually think a "strong" dollar is good. Is this true for U.S. businesses, and does it help or hurt the U.S. balance of payments?
The United States dollar is the most used currency around the world. It represents 61% of the international foreign exchange currency reserves. This makes it easy for the United States to run high trade deficits. This has prevented any currency disaster in the United States. Using the dollar of the United States as the world's reserve currency is good. This is because the dollar is suitable to be a world reserve. After all, it can be used by everyone around the globe. A currency is selected as a reserve currency because it is supported by an economy that is stable (Pettinger, 2017).
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