Question

Discuss the Monetary environment (currency system, currency risk) in the USA.

Answer 1

International monetary systems refer to the operating systems of the financial environment that consist of financial institutions, multinational corporations, and investors.

Monetary policy concern the action of a central bank or other regularly authorities that determine the size and rate of growth if the money supply. .'. For ex- United States, the federal reserve is in charge of monetary policy.

A nation currency system can be defined as the set of laws, convention and practices that determine the form and role currency in the nation's economy.

How does the U.S. Currency system work- It will focus on a pair of legal restrictions that play a critical role in shaping the system. The U.S. Constitution vhave congress exclusive power to define a national monetary unit and produce coined currency.

Currency risk, commonly referred to as exchange rate, arises from the change in price of one currency in relation to another. Investors or companies that have assets or business operations across national borders are expected to currency risks that may create unpredictable profit and losses.

Currency risks is the possibility of loading money due to unfavorable moves in exchanges rates. Firms and individual that operate in overseas market are exposed to currency risk.