Template-Type: ReDIF-Article 1.0

Author-Name: Gusztáv Báger
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: bagerg@gmail.com

Title: Operation of the International Monetary and Financial System – Structural Tensions of a "Non-system"

Abstract: Over the past few decades, the international monetary and financial system has
been a subject of constant economic debate. More recently, topics such as the
activity of global financial institutions and corporations, developments in money and
capital flows, international regulation and the role of central banks were thrust into
the limelight by the outbreak of the financial crisis in 2007 and its culmination into a
global crisis in 2008. The depth and impact of the crisis highlighted the deficiencies of
the system, prompting participants to seek solutions that may facilitate sustainable,
inflation-free and balanced economic growth by eliminating or at least mitigating
the negative externalities of the system.
With that in mind, one of the objectives of this study is to provide a brief presentation
of the conceptual framework and main structural components of the existing system.
This is also necessitated by the considerable changes that have taken place relative
to the Bretton Woods system. The second objective of the study is to present a
comprehensive overview of the complicated operation of the system by outlining the
role and the interaction between the key elements of the system without intending
to offer an in-depth examination of the details.
We found that, owing to its significant deficiencies, the international monetary
and financial system fails to meet the criteria of a well-functioning system. It is not
suitable to keep exchange rate and capital flow developments in balance on a global
scale, to ensure an optimal level of international liquidity, and to harmonise the
relationship between international (economic and monetary policy) cooperation,
spillovers and diverging volatility levels.

Classification-JEL: G01, G010, G21, G23, F33
Keywords: monetary and financial system, global financial institutions and
corporations, IMF, central banks
Pages: 151-186
Volume: 16
Issue: 4
Year: 2017
File-URL: http://english.hitelintezetiszemle.hu/letoltes/fer-16-4-e1-ba-ger.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:16:y:2017:i:4:p:151-186