Question

What is International monetary and financial system? Explain its significance to

the country.

Answer 1

An international monetary system is a set of internationally agreed rules and conventions with supporting institutions that facilitate international tradeand also cross border investments.

The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic factors that together facilitate international flows of financial capital.

importance

As far as international monetary systems are concerned their purpose is to facilitate international economic exchange since most countries have national currencies that are not typically accepted as legal payment beyond their borders.The global use of the dollar and the euro paves way for  monetary conditions to be effected well beyond the respective issuing economies. Many countries also import monetary conditions when setting policy rates to limit interest rate differentials and exchange rate movements against the major currencies.So inorder to facilitate smooth international trade without making different currencies an issue international monetary system are very important for any country for international trade and development.

The global financial system is an important tool to find the exchange rates, compare inflation rates, get an idea about investing in international debt securities,judge the economic status of other countries and judge the foreign markets.it aims  to promote international monetary cooperation and exchange stability; to foster economic growth and high levels of employment; and to provide temporary financial assistance to help ease imbalances of payments.