Inadequate mechanism for the creation of liquid reserves


The essential defect of the international monetary system is that, apart from such additions to reserves as result from intermittent increases in monetary stocks of gold, provision is made for the expansion of liquidity mainly through the deficits of key currency countries, whereas those countries may not be running deficits concurrent with an expansion in world demand for liquid reserves. Moreover, the maintenance of confidence in the system depends on the key currencies being strong, and hence on the key currency countries usually being in external balance, if not in surplus. Without provision for an orderly increase in liquidity to permit financing of a growing volume of trade, economic development is inhibited.

Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 17: Partnerships to achieve the Goal
Problem Type:
F: Fuzzy exceptional problems
Date of last update
16.10.2020 – 17:41 CEST