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International Finance: (International monetary system 1925-1960) - Essay Example

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International Finance: (International Monetary System 1925-1960) Table of Contents a. 4 b. 9 Reference 13 a. Introduction: International monetary system facilitates international trade, cross border investment and reallocation of capital between nation states…

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International Finance: (International monetary system 1925-1960)

The Industrial Revolution increased the production of goods and widened the basis of world trade (Hodge, 2008, p.287). At that time the necessary condition to promote world trade was a stable exchange rate system. Background World War I World War I (1914-1918) is also known as the Great War. It caused huge loss of property and human life. It destroyed four empires i.e. Austro-Hungarian, German, Romanov and Ottoman. 10 million were killed and around 21 million were wounded (Digitalhistory, p.1). France suffered innumerable property damage. It created circumstances in Balkans, in Russia and in Germany for which people not prepared. It also resulted in uncertainties, instability and economic collapse which were very difficult to deal with. World War II There were many similar reasons of World War I for which World War II was fought. This time the alliance system was Axis powers i.e. Italy, Germany, Japan and the Allied Powers i.e. Russia, Great Britain and France. Hitler’s invasion of Poland in September 1939 drove Great Britain and France to declare war on Germany and this gave rise to World War II (Boisestate, p.1). The Great Depression also led to the coming of World War II. Monetary System before World War I From the 1870’s to the outbreak of World War I in 1914, the world benefited from a well integrated financial orders also known as First Stage of Globalization. ...
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