INTERNATIONAL FINANCIAL MARKETS AND INSTRUMENTS
INTERNATIONAL MONETARY SYSTEM
The International Monetary System refers to institutions, norms and an entire environment that facilitates the settlement of international payments. There are settled systems for exchange rates world over that play an important role in settlements. The international monetary system and liquidity systems are helped by IMF.
Liquidity refers to the ease with which an asset can be turned into money without the loss of value. Foreign exchange markets provide liquidity, allow risk-sharing, and help in price discovery in international settlements. They keep the transaction cost low.
We have partly dealt with monetary policy in Unit 1 and will deal with other such aspects in ...
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