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Gold was the demand and as such many countries accepted it as a common medium of exchange. Despite it acceptance on in the international market, many times there were discontentment between trade members as it was not a stable medium of exchange.
A major force that affects currency exchange rates is the Balance of Payments (BOP) of the various member countries. For this reason, governing bodies such as the IMF were established for member countries that may have difficulties keeping their Balance of Payment out of deficit.
INTERNATIONAL MONETARY SYSTEM (IMS)
- The IMS could be defined as the establishment of rules, customs, practices and institutions that deal with money - debts, payments, investments - by which countries value and exchange their currencies internationally
- IMS exist because most countries have their own currencies and because it is necessary to have since businesses must be conducted across international barriers...
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