The Study Of Causes And Impacts Of Money Internationalization

After WWII, by the means of Bretton Woods System, Western Countries which were dominated by the US established a new international monetary system, which was also under the control of the US. The US dollar was equaled to gold henceforth, and formedas the major contain of the rest of world’s foreign exchange reserves, which was far beyond compared andreplaced.However, attributed to abuse of the US dollar’s credit, the US’s dominance of monetary system was overturned by many crises of the US dollar occurring in this couple of years until 1973.After the collapse of Bretton Woods, the leadership of US dollar was challenged by a series of money, especially from Japanese Yen and Deutsche Mark for their fast and steady economic growth. When these two countries promoted their currencies to be internationalized, Japanese economy was encountered with assets bubble burst and accordingly stunned by stagnancy, while Deutsche Mark flourished in 1990s and graded to Euro which challenging the monopoly of the US dollar after 1999.Deutsche Mark had groped for a new successful way for money internationalization. Based on the liberalization of Germany Capital Account and Financial market, German Monetary Authority pushed forward the cooperation with European partners by floating exchange rate, accompanied with tightening monetary and rigid financial supervisory. Illuminated by the theories of "Social Market Economy" deriving from Freiburg School, the market competitive behavior was encouraged by Federal Government, which spurred German economic growing smoothly. Successfully, a new way for money internationalization was invented by Germany, which was embodied by "high GDP growth, healthy net balance sheet and low inflation rate."...