Though the International Monetary Fund and the World Bank, two financing institutions that were born because of the system are still existent, the initial system that they adopted were substantially altered by Nixon's cessation of gold standard.
Adam Smith, the father of economics, and his contemporary thinkers, has started recognizing and studying on the benefits from international trade and capital mobility. Though overseas trading has already been practiced centuries earlier before their era, there was no formal academic and scientific study for this. Smith, in his pioneering investigation on the British economy, has plotted out a fertile condition for nations to maximize their gains: the presence of a sufficiently functioning international monetary system that promotes and facilitates trade and efficient allocation of capital (Ferderer, 2002, p.1). The 18th century admired the prospects for mutual gain that they get from free trade between nations (Understanding economics, 2006).
In the past 200 years, capital mobility in large quantities and allocation of these to lucrative and promising i ...Show more