{"id":3043,"date":"2024-12-14T11:45:47","date_gmt":"2024-12-14T11:45:47","guid":{"rendered":"https:\/\/rajaalmarzoqi.com\/rajaalmarzoqi\/?p=3043"},"modified":"2024-12-15T15:46:03","modified_gmt":"2024-12-15T15:46:03","slug":"the-global-exchange-rate-system-and-its-role-in-creating-economic-crises","status":"publish","type":"post","link":"https:\/\/www.rajaalmarzoqi.com\/?p=3043","title":{"rendered":"The global exchange rate system and its role in creating economic crises"},"content":{"rendered":"
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The currency war between countries reflects a structural imbalance in the composition of the monetary system in the global economy, especially in the exchange rate system. After the collapse of the Bretton Woods Agreement of 1971, which governs the relationship between the currencies of the world’s countries and fixes the value of currencies against each other, as well as fixing the relationship between the dollar and gold at $35 for an ounce of gold, which was signed in 1944 in the city of Bretton Woods in the United States, the currency system entered a new historical phase that does not reflect any cooperation or agreement between the countries of the world, while the period that prevailed between 1944 and 1971 represented a global monetary system that was agreed upon and the International Monetary Fund was established to maintain it. Therefore, the existing monetary system is the result of the collapse of the agreement, as some countries switched to a floating exchange rate system, where the demand and supply for the currency determines its price, while other countries continued to cling to a fixed exchange rate, where the currency is fixed at a fixed value with another currency, such as the case of the Saudi riyal and the dollar, either because it suits their economies or they found themselves in this system and it was difficult for them to change, while other countries switched from a fixed exchange rate system with one currency to a basket of currencies, and this is more Flexibility with a single currency and less than a floating system. Since the collapse of the Bretton Woods Agreement, the search has been underway for an alternative to this system, which is the product of the collapse, whether in scientific conferences or by international organizations. Indeed, one of the reasons that led to the global economic crisis is the exchange rate system and its structural defect. If it is not addressed and the currency war continues, it may lead to another economic crisis.
\nThe global exchange rate system is based on the dollar as a global reserve currency, and its monetary policy is determined by the internal conditions of the American economy, which may not suit the rest of the world, but will affect hundreds of millions of people around the world; and now the euro is competing with the dollar in this and may partly participate in it, despite European officials\u2019 statements that they do not want to do so. The shift of more than 80 percent of the world\u2019s countries to a free or managed floating exchange rate has led to the instability of the currency market and increased volatility between them, either due to the economic factors that determine its price or due to government interventions and the conflict of monetary policies between governments. The existing monetary system contributes to creating a financial imbalance between the countries of the world, as is the case now with huge surpluses for China, Asian countries, and oil countries and a huge deficit in the US trade balance. In addition to the above, this system increases the economic costs borne by the business sector due to the inefficiency of the system in using hedging against currency fluctuations and the losses it may incur from the change in the currency price against the currencies of other countries of the world. These costs represent losses to the global economy, which reduces the economic welfare of the entire world. If the global system is efficient and stable, we expect to increase business, reduce costs for the business sector and achieve higher economic growth for the global economy. The world is in dire need to find an alternative to this current system. The G20, in which the Kingdom and other developing countries are represented, along with industrialized countries, may be an appropriate place to discuss such a matter, despite America\u2019s opposition to this, as changing this system would result in the loss of America\u2019s gains from the dollar as a global reserve currency. Since the Kingdom is an important member of this group, supporting scientific research between local researchers and their counterparts from other countries in this field may be a contribution from the Kingdom to global stability. It may be appropriate for this to be done in cooperation with the developing countries that are members of the G20 and for the Kingdom not to be alone in this.
\nHowever, if it is not addressed and appropriate solutions are put in place, as governments see it based on scientific studies that take into account the effects of the new system on all economic variables, the markets will work to change to reduce the risks to them as a result of the fluctuation of the value of currencies against each other, which will inevitably lead to an inefficient solution for the global economy and the continuation of this inefficient model.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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The currency war between countries reflects a structural imbalance in […]<\/p>\n","protected":false},"author":1,"featured_media":3178,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17],"tags":[],"class_list":["post-3043","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=\/wp\/v2\/posts\/3043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3043"}],"version-history":[{"count":2,"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=\/wp\/v2\/posts\/3043\/revisions"}],"predecessor-version":[{"id":3179,"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=\/wp\/v2\/posts\/3043\/revisions\/3179"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=\/wp\/v2\/media\/3178"}],"wp:attachment":[{"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rajaalmarzoqi.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}