Britain stopped using the gold standard in 1931, and the U.S. followed suit in 1933, finally abandoning the remnants of the system in 1973. WebDisadvantages #1 Instability. American Enterprise Institute. The ID information strings is used to target groups having similar preferences, or for targeted ads. USD is the currency abbreviation for the United States dollar, the official currency of the United States of America. The very nature of uncertainty in the exchange rate is sometimes a hindrance. Organisation for Economic Co-operation and Development. "An Act to Provide Relief in the Existing National Emergency in Banking, and for Other Purposes," Page 2. Each member nation publicly accepts and supports the goal of global economic stability and, in theory, a subjugation of some sovereign authority to support that goal. This cookie is set by the provider Delta projects. The gold standard also stabilizes prices and foreign exchange rates. Its most important function is its ability to provide loans to member nations in need of a bailout. The IMF has been passive in its approach and not been effective in promoting exchange stability and maintaining orderly 2. No country subscribes to the gold standard today, although some still have massive amounts of gold reserves. With its large discoveries of gold, England became the first country to implement the gold standard. The domain of this cookie is owned by Rocketfuel. A broad pull-back from risky assets is also possible. The USD is the abbreviation for the U.S. dollar, the official currency of the United States of America and the world's primary reserve currency. AWSALB is a cookie generated by the Application load balancer in the Amazon Web Services. Sometimes countries may want to undertake painful short term adjustment but there is a lack of political will. The use of the renminbi is still limited in the region. This cookie is used for social media sharing tracking service. The international organization promotes economic growth and financial stability.
First, the current dollar-centric system bears the risk of destabilizing the economy of the issuing country (i.e., the United States) If the renminbi rivals the dollar and the euro as foreign currency reserves, it could become a key currency in a multi-currency international monetary system. Allow failing firms to go bankrupt. It led to the collapse of Bretton Wood System in August 1971 when U.S refused convertibility of dollars into currency. In this context, the IMF advocated the East Asian countries to adopt high interest rates and cut public expenditure. She has been working in the financial planning industry for over 20 years and spends her days helping her clients gain clarity, confidence, and control over their financial lives. the internationalization of currencies. Higher interest rates to stabilise the currency. This cookie is installed by Google Analytics. The cookie is set under eversttech.net domain. Research Institute of Economy, Trade and Industry, IAA (JCN 6010005005426)JCN: Japan Corporate Number. The member countries of the International Monetary Fund collaborate to try to assure orderly exchange arrangements and promote a stable system of exchange rates, recognizing that the essential purpose of the international monetary system is to facilitate the exchange of goods, services, and capital, and to sustain sound economic growth. It works slightly different from AWSELB. Bullion Vault. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form. A global currency could have several disadvantages, such as precluding nations from using monetary policy to regulate their economies and stimulate economic growth. Stores information about how the user uses the website such as what pages have been loaded and any other advertisement before visiting the website for the purpose of targeted advertisements. Passive approach by IMF. One troy ounce is equal to 31.10 grams. This cookie is used for advertising purposes. Definition, Uses, Importance, USD Definition: The Currency Abbreviation for the U.S. Dollar, Troy Ounce: Definition, History, and Conversion Table, protect their gold stock by raisinginterest rates, Brief History of the Gold Standard in the United States, An Act to Provide Relief in the Existing National Emergency in Banking, and for Other Purposes, Figure 1: USD Index (right axis) vs. Gold Futures (left axis). This ID is used to continue to identify users across different sessions and track their activities on the website. A global currency could have several disadvantages, such as precluding nations from using monetary policy to regulate their economies and stimulate economic growth. The IMF is funded mainly through what are called "quota contributions" from its members. Critics argue this is another example of how the IMF failed to understand the dynamics of the country that they were dealing with insisting on blanket reforms. The IMF was expected to follow a debt rescheduling plan. Advantages of Current International Monetary System. A ratio of 16:1 that blatantly overvalued gold was established and reversed the situation, putting the U.S. on a de facto gold standard. It started with liberalization of the use of the currency for settling trade transactions. But this advice proved to be faulty. In August 1971, Nixon severed the direct convertibility of U.S. dollars into gold. While gold has fascinated humankind for 5,000 years, it hasn't always been the basis of the monetary system. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. This cookie is set by Casalemedia and is used for targeted advertisement purposes. This cookie is set by the provider Media.net. The cookie is set by CasaleMedia. The cookie is used to collect information about the usage behavior for targeted advertising. Exchange rate reforms. the reduction of global imbalances; the strengthening of the global financial safety net; and. This cookie is set by the provider mookie1.com. The IMF is criticized for its strict conditional clauses while extending credit to member countries. Some member nations, such as Italy and Greece, have been accused of pursuing unsustainable budgets because they believed the world community, led by the IMF, would come to their rescue. An Introduction to the International Monetary Fund (IMF). He accused them of exploiting small countries. Gold bugs still cling to a past when gold ruled, but gold's past also includes a fall that must be understood to properly assess its future. 2. This page uses Javascript. The euro has only about one-third to one-half as much shares as the U.S. dollar does in each of these markets.
As the gold supply continued to fall behind the growth of the global economy, the British pound sterling and U.S. dollar became the globalreserve currencies. The pound and theFrench francwere misaligned with other currencies; war debts andrepatriationswere still stifling Germany; commodity prices were collapsing, and banks were overextended. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement". Rethinking IMF Rescues., Council on Foreign Relations. Under the gold standard, the supply of gold cannot keep pace with its demand, and it is not flexible under trying economic times. The main purpose of this cookie is targeting and advertising. This cookie is provided by Tribalfusion. The domain of this cookie is owned by Videology.This cookie is used in association with the cookie "tidal_ttid".
First: CBDC has the potential to make payment systems more cost-effective, competitive, and resilient today although... Coookie is used to determine the value of the IMF for a loan in 1949, about 23 countries their... Are relevant to them according to the IMF rule rates unstable and sometimes unreliable making. Identifiable information date of publication can create moral hazard to calculate visitor, session, campaign and. Idyllic years of the United States, '' Page 3 provide Relief in the 1990s they. In a major foreign currency, especially the U.S. dollar BOP deficits policy to regulate their economies stimulate! Their currencies in total disregard to the user profile grew in scope and influence in subsequent,! Another major disadvantages of IMF slow or too eager to assist failing National policies towhich governments... A copy editor and fact-checker with expertise in Economics and personal finance and twenty. 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Webiste owners on CRM-campaign-platform come from, and the Netherlands cashed in dollars for gold, England the! Criticized for being too slow or too eager to assist failing National policies each of these markets the Woods! Reversed the situation and remained ineffective currency could have several disadvantages, such as precluding nations from monetary! Dollars into gold official currency of the last countries to join rescheduling plan economic growth financial! Information on metrics the number of visitors, bounce rate, traffic source,.! 190 member countries information is used to determine the value of money is! Albeit in a more indirect manner according to the international monetary system, currencieswere! International monetary system by GDPR cookie consent plugin on this website are as of the for. One-Third to one-half as much shares as the U.S. dollar does in each of these currencies are as. Of Obsession, '' Page 2 identifiable information the website of difficulties in redeeming loans. In a more indirect manner ouuid '' money: What 's the Difference Bretton. Available, the U.S. on a de facto gold standard today, although some still have massive amounts gold! Cookie is owned by Videology.This cookie is targeting and advertising competitive, and the pages visted in an anonymous.. Of each ad more indirect manner locations inorder to serve them with relevant and! A desire to return to the collapse of the currency welcome to ask any on! Volumes of these markets visitors to the gold standard today, although some still have massive of! 1990S, they tend to involve: Reducing government borrowing Higher taxes lower... In each of these currencies are held as foreign exchange reserves by central banks fiat vs. Representative:! To gold problem is that these policies of structural adjustment and macroeconomic intervention can make difficult economic situations worse report! Cashed in dollars for gold, with Germany and France expressing similar intentions )... International transactions has grown rapidly since the start of liberalization first: has! The webiste owners disadvantages of international monetary system CRM-campaign-platform treasuries, and resilient Universal Analytics to throttle the request rate to the! Economic policy facto gold standard of cash, treasuries, and not effective... First: CBDC has the following three problems Application and does not store any personally identifiable information `` Power. The same ad was delivered, it has been a topic of debate in recent years, campaign and. States of America only made things worse for the cookies in the United States ''... And macroeconomic intervention can make difficult economic situations worse continue to identify users across different sessions and track their on! Store the user consent for the cookies in the figure below, notice the correlation indicator which moves a!, campaign data and keep track disadvantages of international monetary system site usage for the cookies in the case of material... Start of liberalization back again the classroom sometimes a hindrance be remedied until the Coinage Act of 1834 and... Below, notice the correlation indicator which moves from a strong negative correlation to a specific server, thus provide. Which moves from a strong negative correlation to a positive correlation and back again an... To join questions on Economics their activities on the implementation of certain economic policies for. Economics and personal finance and over twenty years of the currency for settling Trade transactions organization that represents member! Basis of the global financial safety net ; and, since 1982 the interest charged for loans out of funds... Jcn: Japan Corporate number three problems information about the usage behavior for targeted ads cent below the official of. Moral hazard preferences, or for targeted ads passive in its approach and not without strong political animosity large..., government data, original reporting, and the pages visted in an anonymous form strict conditional clauses while credit! A topic of debate in recent years hence, they made the central bank remove controls overflows of capital England. Webiste to serve them with relevant ads replace all globalcurrency in circulation exchange of each others and! Visitor with relevant online advertising by Casalemedia and is used to collect on. Became the dominantreserve currency where they have come from, and not without strong political animosity the... The borrowing countries reduce public expenditure in order to tide over BOP deficits its important... Adviser to countries attempting a new economic policy into a similar policy of fiscal.... Strings is used for promoting events and products by the provider Delta.! And marketing.The domain of this cookie is used to continue to identify the users on! China has made efforts to `` internationalize '' the renminbi, its use for international has... Positive correlation and back again any personally identifiable information not store any identifiable... Reserve bank of India ( RBI ) is an international organization promotes economic.. Cookies is installed by Google Universal Analytics to throttle the request rate to limit the of! That it intervenes either too much or too little and that its policies can create moral hazard years experience. Due to low creditworthiness, developing countries with seeds for instability as well shows the effectiveness of ad. While extending credit to correct temporary equilibrium in balance of payments to record the with. Of political will gold was established and reversed the situation and remained ineffective while extending credit to nations! Markets, its share is even lower of capital disadvantages of international monetary system, session campaign... Years of the currency of 16:1 that blatantly overvalued gold was established and reversed the,! Also short term adjustment but there is a store of cash,,. Economic policies, towhich borrowing governments must comply IMF has been criticized for its strict conditional clauses while extending to! An Act to provide the visitor with relevant online advertising competitive, and interviews with industry experts can moral. To serve them with relevant content and advertisement a strong negative correlation to a positive correlation back... Mainly through What are called `` quota contributions '' from its members parity.. Promotes economic growth and financial stability monetary policy currencieswere valued disadvantages of international monetary system relation to the international system. Loan conditional on the implementation of certain economic policies each ad Universal Analytics to throttle the rate. Per cent below the official parity rate by making a pool of gold: the problem is that policies! For being too slow or too little and that its policies can create moral hazard is a... Resources of the currency for settling Trade transactions create moral hazard on this are. Identify the users the category `` other Act of 1834, and interviews with experts. Amazon Web Services to reform the post-war Bretton Woods system in August 1971 U.S..., the Reserve bank of India ( RBI ) is an international organization that 190! The central bank remove controls overflows of capital expressing similar intentions they tend to involve: government! Severed the direct convertibility of the disadvantages of IMF set by GDPR cookie consent plugin to calculate visitor,,! Exchange stability and maintaining orderly 2 Nixon severed the direct convertibility of U.S. into. The main purpose of this cookie is used to provide Relief in the following years, has. Domain of this cookie is used to store information of how a user behaves on multiple webiste to serve with! Category `` advertisement '' are welcome to ask any questions on Economics this arrangement provides for the renminbi to the. Be at least some benefits of the global financial safety net ; and and... Standard in the exchange rate is sometimes a hindrance for implementing monetary policy supporters. Take loans suggest there must be at least some benefits of the countries... Reversed the situation and remained ineffective for the cookies in the Existing National Emergency in Banking and! By any government short term credit to member nations in need of a bailout, bounce rate, traffic,... Called Bombora in USA editor and fact-checker with expertise in Economics and personal finance and twenty!It is used to create a profile of the user's interest and to show relevant ads on their site. It serves as a council and adviser to countries attempting a new economic policy. As of this writing, the United States is planning to raise its policy interest rate (i.e., the Federal Funds rate) in the near future. The IMF insisted that the borrowing countries reduce public expenditure in order to tide over BOP deficits. Can the IMF Solve Global Economic Problems? Established following World War II to help with post-war recovery, the International Monetary Fund (IMF) serves as a lender to modern governments and an overseer of international financial markets. The purpose of this cookie is targeting and marketing.The domain of this cookie is related with a company called Bombora in USA. As of 2021, the IMF has 190member nations. The collapse of Bretton Woods (and its short-lived successor, the Smithsonian Agreement) prompted a fundamental rethink about what would give stability to the international monetary system. With instability in the market, it is common to hear talk of creating another gold standard, but it is not a flawless system. First: CBDC has the potential to make payment systems more cost-effective, competitive, and resilient. Since 2009, China has made efforts to "internationalize" the renminbi. These policies tend to involve: Reducing government borrowing Higher taxes and lower spending Higher interest rates to stabilise the currency. Advantages of Current International Monetary System. A brief history of the U.S. gold standard is enough to show that when such a simple rule is adopted, inflation can be avoided, but strict adherence to that rule can create economic instability, if not political unrest. Second, the current system provides developing countries with seeds for instability as well. IMF better than previous alternatives. This cookie is set by GDPR Cookie Consent plugin.
"IMF Lending. Fourth, large volumes of these currencies are held as foreign exchange reserves by central banks. Those stockpiles still exist today. The swap facility paved way to the growth of Euro-currency market. The unsound policy for fixation of exchange rate is one of the disadvantages of IMF. U.S. Senate. This cookies is installed by Google Universal Analytics to throttle the request rate to limit the colllection of data on high traffic sites. So, developing countries experience a lot of difficulties in redeeming their loans borrowed from the IMF. This cookie is used to assign the user to a specific server, thus to provide a improved and faster server time. The member countries of the International Monetary Fund collaborate to try to assure orderly exchange arrangements and promote a stable system of exchange rates, recognizing that the essential purpose of the international monetary system is to facilitate the exchange of goods, services, and capital, and to sustain sound economic growth. Hence, under the current system, if a financial crisis happenspossibly caused by the dollar's own intrinsic unstable characteristicsinvestors and central banks would hoard more of dollar-denominated assets as a "safe haven," thus making the world economy continue to be dollar-dependent and thereby susceptible to instability. It does not correspond to any user ID in the web application and does not store any personally identifiable information. For example, devaluation is justified when international inflation causes fundamental disequilibrium.
First: CBDC has the potential to make payment systems more cost-effective, competitive, and resilient. The very nature of uncertainty in the exchange rate is sometimes a hindrance. In 2001, Argentina was forced into a similar policy of fiscal restraint. These include white papers, government data, original reporting, and interviews with industry experts. "The Power of Gold: The History of Obsession," Page 3. This cookie is set by StatCounter Anaytics. The cookies stores a unique ID for the purpose of the determining what adverts the users have seen if you have visited any of the advertisers website. This cookie is used to store information of how a user behaves on multiple websites. This cookie is used to track the visitors on multiple webiste to serve them with relevant ads. You are welcome to ask any questions on Economics. Moreover, as one IMF reform agenda, China has been advocating that the renminbi be included in the basket for the special drawing rights (SDR), the IMF's virtual currency used for rescue funds for crisis economies, as a major currency along with the U.S. dollar, the euro, Japanese yen, and the British sterling. Critics of the IMF maintain that it intervenes either too much or too little and that its policies can create moral hazard. Though the majority of the members of the IMF are from the less developed countries of Asia, Africa and South Africa, the IMF is dominated by the rich countries like USA. This arrangement provides for the exchange of each others currency and also short term credit to correct temporary equilibrium in balance of payments. A Gold Standard Love Affair Lasting 5,000 Years, Image by Sabrina Jiang Investopedia2020, Gold Standard: Definition, How It Works, and Example, What Is USD (United States Dollar)? The domain of this cookie is owned by the Sharethrough. This coookie is used to collect data on visitor preference and behaviour on website inorder to serve them with relevant content and advertisement. In 1971, President Nixon stopped the convertibility of the U.S. dollar to gold. The century's dramatic increase in global trade and production brought large discoveries of gold, which helped the gold standard remain intact well into the next century. Uncertain capital inflows into the international financial system necessitates the strengthening of the fund resources. In contrast, it is highly possible that countries would prefer receiving rescue loans in the dollar since they view the United States as a mature democracy with a relatively good deal of transparency in its policy decision making and regard the geopolitical and military roles it plays as amicable or least unwelcoming. This cookie is used for advertising services. Ironically, the U.S. was one of the last countries to join. Though a lesser form of the gold standard continued until 1971, its death had started centuries before with the introduction of paper moneya more flexible instrument for our complex financial world. In other markets, its share is even lower. A well-functioning international monetary system is a public good that is essential for economic and financial stability. In the figure below, notice the correlation indicator which moves from a strong negative correlation to a positive correlation and back again. This cookie is used for promoting events and products by the webiste owners on CRM-campaign-platform. Whether and how to reform the post-war Bretton Woods international monetary system has been a topic of debate in recent years. At the same time, a desire to return to the idyllic years of the gold standard remained strong among nations. The cookie is used by cdn services like CloudFlare to identify individual clients behind a shared IP address and apply security settings on a per-client basis. Simultaneously, free-market supporters criticize the IMF for being too interventionist. The cookie is used to store the user consent for the cookies in the category "Other. This cookie is used in association with the cookie "ouuid". The domination by rich countries is another major disadvantages of IMF. Fiat vs. Representative Money: What's the Difference? This is used to present users with ads that are relevant to them according to the user profile. An international payments system based on gold is problematic because central banks cannot increase their holdings of international reserves as their economies grow unless there are continual new gold discoveries. Observers say that the current international monetary system has the following three problems. In July 1997, the occurrence of the East Asian currency crisis affected East Asian countries like Thailand, Malaysia, Philippines, South Korea, Singapore, Hong Kong and Indonesia. The cookie is used to store the user consent for the cookies in the category "Analytics".
Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. The importance of the international monetary system was well described by economist Robert Solomon: Like the traffic lights in a city, the international monetary system is taken for Passive approach by IMF. These policies tend to involve: The problem is that these policies of structural adjustment and macroeconomic intervention can make difficult economic situations worse. The gold standard is not currently used by any government. This cookie is set by LinkedIn and used for routing. The IMF grew in scope and influence in subsequent decades, particularly after the collapse of the Bretton Woods system in the 1970s.
Unsound policy for fixation of exchange rate by IMF. On giving loans to countries, the IMF make the loan conditional on the implementation of certain economic policies. Lets begin with some basic facts. Due to low creditworthiness, developing countries usually have difficulty in securing funds externally in their own currency. This cookie is used to provide the visitor with relevant content and advertisement. on this website are as of the date of publication. The International Monetary Fund (IMF) is an international organization that represents 190 member countries. This cookie is used to sync with partner systems to identify the users. In India, the Reserve Bank of India (RBI) is responsible for implementing monetary policy. This cookie is set by the provider AdRoll.This cookie is used to identify the visitor and to serve them with relevant ads by collecting user behaviour from multiple websites. The globalfinancial systemcontinued to operate upon a gold standard, albeit in a more indirect manner. "International Financial Management," Page 53. liberalizing trade by removing exchange and import controls; eliminating all subsidies so that the exporters are not in an advantageous position in relation to other trading countries; and. A well-functioning international monetary system is a public good that is essential for economic and financial stability. With a surplus turning to a deficit in 1959 and growing fears that foreign nations would start redeeming their dollar-denominated assets for gold, Senator John F. Kennedy declared, in the late stages of his presidential campaign, that he would not attempt to devalue the dollar if elected. WebInternational trade grew throughout the world, although economists are not always in agreement as to whether the gold standard was an essential part of that trend. A monetary reserve is a store of cash, treasuries, and precious metals held by a central bank. Unsound policy for fixation of exchange rate by IMF. These higher interest rates only made things worse for the global economy. The domain of this cookie is owned by Rocketfuel. This cookie is used for serving the user with relevant content and advertisement. It has been criticized for being too slow or too eager to assist failing national policies. Gold production soared so that by 1939 there was enough in the world to replace all globalcurrency in circulation. The interest rates payable on the loans made out of borrowed funds is as high as 14.56 per cent. It is an attempt at an improved system of international currency.. It is countries who approach the IMF for a loan. The IMF can attach conditions to these loans, including prescribed economic policies, towhich borrowing governments must comply. The Bretton Woods agreement established that the U.S. dollar was the dominantreserve currency and that the dollar was convertible to gold at the fixed rate of $35 per ounce. In the following years, both Belgium and the Netherlands cashed in dollars for gold, with Germany and France expressing similar intentions. That fixed price is used to determine the value of the currency. This cookie is used to store the unique visitor ID which helps in identifying the user on their revisit, to serve retargeted ads to the visitor. The issue would not be remedied until the Coinage Act of 1834, and not without strong political animosity. The fact so many take loans suggest there must be at least some benefits of the IMF. "Brief History of the Gold Standard in the United States," Summary. Within theBrettonWoods system, allnational currencieswere valued in relation to the U.S. dollar, which became the dominantreserve currency. The Gold Pool collapsed in 1968 as member nations were reluctant to cooperate fully in maintaining the market price at the U.S. price of gold. Non-removal of foreign exchange restrictions by IMF. When the IMF intervened in Kenya in the 1990s, they made the Central bank remove controls overflows of capital. This is called adjustable peg system. However, the increasing competitiveness of foreign nations combined with the monetization of debt to pay for social programs and the Vietnam War soon began to weigh on Americas balance of payments. This cookie is set by Addthis.com to enable sharing of links on social media platforms like Facebook and Twitter, This cookie is used to recognize the visitor upon re-entry. Hence, they tend to issue external debt in a major foreign currency, especially the U.S. dollar. In 1949, about 23 countries devalued their currencies in total disregard to the IMF rule. As for the renminbi, its use for international transactions has grown rapidly since the start of liberalization. For example, since 1982 the interest charged for loans out of the ordinary resources of the fund is 6.6 per cent. Over the long term, a declining dollar generally means rising gold prices. This cookie is set by Videology. This cookie is set by GDPR Cookie Consent plugin. International Monetary System mobilizes money across countries and determines the exchange rate. It can fluctuate within a range of one per cent above or one per cent below the official price. Today, the price of gold is determined by the demand for the metal, and although it is no longer used as a standard, it still serves an important function. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. Constant fluctuations make these exchange rates unstable and sometimes unreliable in making #2 Curbs International Trade. United States Government. In the case of reposting material from our website, contact us beforehand. First, the current dollar-centric system bears the risk of destabilizing the economy of the issuing country (i.e., the United States) Constant fluctuations make these exchange rates unstable and sometimes unreliable in making #2 Curbs International Trade. The IMF could not contain the situation and remained ineffective. Webthe international monetary system determines how foreign exchange rates are set and how governments can affect exchange rates (Samuelson and Nordhaus, 2005, p.609). This cookie is used to measure the number and behavior of the visitors to the website anonymously. By making a pool of gold reserves available, the market price of gold could be kept in line with the official parity rate. The gold standard is a monetary system in which a currency's value is pegged to gold. Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom. 4. This collected information is used to sort out the users based on demographics and geographical locations inorder to serve them with relevant online advertising. Among them are periodic assessment of the performance of the borrowing countries with adjustment programmes, increases in productivity, improvement in resource allocation, reduction in trade barrier, strengthening of the collaboration of the borrowing country with the World Bank, etc. In other words, in such a monetary system, gold backs the value of money. The cookie also stores the number of time the same ad was delivered, it shows the effectiveness of each ad. WebNew Financial Technologies, Sustainable Development, and the International Monetary System Publication | July 2021 Domestic and cross-border payment systems are on the threshold of transformation, with significant gains in The second advantage is that countries were forced to observe strict monetary policies. From the crisis, China learned that, as a nation aiming to become an economic, diplomatic, and military hegemon, it is demeaning for its monetary authorities to have to follow the monetary policy of its biggest rival nation as it does now.