International Monetary Systems and the Global Financial Crisis
International Monetary Systems and the Global Financial Crisis
Module Code: 56357
Module Title: International Finance and Investments
Module Leader: Dr. Jerome Healy
Student ID: 201113703
Submission Date: 10/04/2013
Word count: 3051 (Excluding abstract, contents, references & Appendixes)
Introduction
Nowadays more than one billion population in all use US dollar and Euro which was born in January 1st, 1999 and officially circulated in January 1st, 2002 and 1.5 billion population use Chinese Renminbi in the world. That is to say, there are almost three billion people that are a half of the whole population of the world using US dollar, Euro and Chinese Renminbi. World economy has experienced a process of American subprime mortgage crisis, American financial crisis, global financial crisis and global substantial economy crisis in just a few years. US dollar got a heavy toll because of the global financial tsunami caused by the bankrupt of Lehman Brothers in September 15th, 2008. Federal Reserve Board (FRB) had responded that they injected liquidity to the financial system to increase the confidence to the market. At present the financial tsunami starts to influence the second largest money, Euro and the result of Euro still cannot be predicted. After more than thirty years’ reform and opening, the GDP of China has increased by the fastest speed in the world. Whether Chinese Renminbi can be influenced by the global financial tsunami is concerned. This essay will first compare the reactions taken by the monetary authorities in US dollar, Euro and Chinese Renminbi systems to response the global financial crisis. Then it will analyze the role of central bank and the use of monetary policy and fiscal policy in managing a single currency and discuss the actions taken to support the banking system and manage sovereign debt problems. Finally, it will refer to the conditions required for successful operation of a single currency covering many states.
Module Code: 56357
Module Title: International Finance and Investments
Module Leader: Dr. Jerome Healy
Student ID: 201113703
Submission Date: 10/04/2013
Word count: 3051 (Excluding abstract, contents, references & Appendixes)
Introduction
Nowadays more than one billion population in all use US dollar and Euro which was born in January 1st, 1999 and officially circulated in January 1st, 2002 and 1.5 billion population use Chinese Renminbi in the world. That is to say, there are almost three billion people that are a half of the whole population of the world using US dollar, Euro and Chinese Renminbi. World economy has experienced a process of American subprime mortgage crisis, American financial crisis, global financial crisis and global substantial economy crisis in just a few years. US dollar got a heavy toll because of the global financial tsunami caused by the bankrupt of Lehman Brothers in September 15th, 2008. Federal Reserve Board (FRB) had responded that they injected liquidity to the financial system to increase the confidence to the market. At present the financial tsunami starts to influence the second largest money, Euro and the result of Euro still cannot be predicted. After more than thirty years’ reform and opening, the GDP of China has increased by the fastest speed in the world. Whether Chinese Renminbi can be influenced by the global financial tsunami is concerned. This essay will first compare the reactions taken by the monetary authorities in US dollar, Euro and Chinese Renminbi systems to response the global financial crisis. Then it will analyze the role of central bank and the use of monetary policy and fiscal policy in managing a single currency and discuss the actions taken to support the banking system and manage sovereign debt problems. Finally, it will refer to the conditions required for successful operation of a single currency covering many states.