Problem
Inadequate mechanism for the creation of liquid reserves
Nature:
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.
Broader Problems:
Inadequate domestic monetary reservesInadequacies of the international monetary system Aggravates:
Imbalance of paymentsGlobal shortage of fundsOver-reliance of government on money creation Subject(s):
Commerce → FinanceSocietal Problems → Inadequacy
Related UN Sustainable Development Goals:
Problem Type:
F: Fuzzy exceptional problems Date of last update
16.10.2020 – 17:41 CEST