Several nations are reorganizing and restructuring economic sectors to record growth, development, and increment in productivity, performance rates, and high quality economic standards (Ana, Paulo & Klaus, 2010). The dissertation will therefore focus on International Financial System (IFS) in relation to banks, financial institutions, financial markets, and assets. The IFS is a global credit creating and allocating body located globally. It relies on International Monetary System for availability of currencies supportive to the payment procedures and systems. In order to fully comprehend the IFS, the dissertation will discuss the following aspects; International Monetary System (IMS), International Monetary Fund (IMF), fiscal policies, global unemployment rates, economic growth rates, and inflation as well as economies of corruption (Gail, 2011).
International Monetary System (IMS)
International Monetary System (IMS) comprises an integrated set of flows governing sets of currencies, government financial institutions, and money based on exchange rates and payment obligations across global nations. Thus, the central banks, commercial banks, money market funds, and international financial organizations as well as open currency markets and government bonds make up the International Monetary System (IMS). It utilizes money in various ways, such as a medium of exchange in relation to goods and services, to facilitate cash and/or capital flows, earn interests, and standardize values with regards to financial assets exchanged across global nations. The International Monetary System (IMS) also aims to foster economic growth and development across financial markets (Gail, 2011).
International Monetary Fund (IMF)
It is an international financial organization initiated and created in 1944 and 1945 among twenty-nine global nations. Its main goals and objectives include reconstructing international payment systems to facilitate member nations to borrow financial assets temporarily through a formed quota system. It operates under self-correcting policies and principles to improve global economies. Age Bakker asserted that the IMF undertakes roles and responsibilities as stimulus measures in coordinating financial crises. He affirmed that IMF consists of global measures aimed at growing international capitals to addresses current and future financial crisis. He based his arguments against the IMF using the most recent financial crisis. The union is therefore responsible, within the financial sector, for implementing financial incentives (Mark, 2009).
IFS versus Economic Challenges
Global economies face various challenges including increasing rates of unemployment, ineffective policy policies, and managing global inflation rates. The IFS, IMS, and IMF are tasked with ensuring global economies are growing, developing, and expanding sustainably. More so, IFS ought to anticipate financial crisis in order to either prevent or reduce the adverse outcomes. However, global economies have faced various crises. Thus, the IFS failed to prevent, contain, and resolve them. IMF is tasked with reinvigorating international financial systems. Conversely, the IFS and IMS ought to control and manage global financial crises based on the formulated and applicable financial policies and responses. However, financial crises have attributed to several changes within IFS, IMS, and IMF. It is therefore crucial for the IFS to address these issues in order to affirm its legitimate role and capacity in handling international financial economic matters across global monetary and financial systems (Oliver, 2009).
Foremost, IFS ought to decentralize assigned financial duties and responsibilities to IMS and IMF. Decentralization also refers to IFS sharing roles and tasks with other financial institutions, such as commercial banks and financial institutions. Through decentralization, the IFS can be more capable in fostering international monetary and financial stability as well as quick recovery in time of global financial economic crisis (Oliver, 2009).
International Economic Growth
Economic growth can be attributed to increased inventories, investments, and reduced spending among global consumers. Economic growth across global nations can be accounted by accessing the period prior and after a recession period. For decades, world economies have been able to record positive growth rates. This has been attributed to gradual increases in relation to global per capita incomes. Global economies, however, experienced a stagnated or little growth rate during the recession period. Capital being a factor of production depreciated across various international economic regions. Sophisticated and well-organized financial markets, trade securities, capital, incomes, and integrated economies were also adversely affected (Mark, 2009).
Trade across international markets and industries contribute towards international economic growth through trade of inputs and final goods. Different international regions, market sizes, technologies, and specialization across industries form a model assuming free entry, differing pricing policies, and input demands. This model asserts that the recorded impeccable economic growth will continue to be witnessed internationally under the following principles. Firstly, producers within various regional global markets ought to work towards achieving capital stocks, savings, human capital, and productivity equilibriums. Secondly, due to globalization international tradable goods, intermediate inputs, final goods, and reduced prize levels result in increased incomes and factor prices favoring economic growth. It is however crucial to note that, international economic growth rate is a slow process during recession. More so, it integrates different and diverse regions and economic sectors contributing towards global economy (Jaume, 2008).
Thus, (IFS) ought to possess resources including capital and labor, manufacture of goods and services and financial and/or banking organizations. They should be capable of providing highly enabled, valued, and efficient technological and financial strengths evolving to offer better, improved, and enhanced dynamic financial and economic solutions (Mark, 2009).
An International Perspective on Unemployment Rates
Using the 2012 job growth rate records, it was affirmed that the burst of jobs across global nations lower unemployment rates. Various global nations and economies constantly rally for a reduction in unemployment rates in the world, especially among the youth. Sluggish labor markets are listed as major contributors to the increasing unemployment rates. Conversely, professionalism, enhanced manufacturing, and business services were listed as major contributors in reducing unemployment rates. Sluggish labor markets can be credited to recession and global economic crises. They have attributed to increasing rates of unemployment, especially among the young populace across industrial countries and States. Unemployment can be attributed to various economic factors across international countries including reduced labor force among the youth, declining emphasis on open careers, increase in apprenticeship training, extended schooling, and job mobility (Constance, 2011).
International unemployment trends indicate more youths are jobless than their elderly counterparts among countries, such as Japan, Germany, United States, France, Sweden, and Canada. The recession period that hit the global economic markets resulted in loss of job vacancies attributing to increased rates of unemployment. Unemployment rates indicate underutilization of economic resources, outflow of foreign labor forces, different and unbalanced supply and demand trends, shrinking labor sector, and increased suffering among minority groups as they strive to earn a living without earning an income. Countries ought to reduce the rate of unemployment in order to balance factors of economy as they seek to grow and develop (Constance, 2011).
However, the IFS, IMS and IMF should reduce the number of factors supporting and attributing to high rates of unemployment. IFS should allocate resources including capital, land, management skills, and labor in creating job opportunities while increasing the manufacture of goods and services needed among global nations and societies to survive and grow economically. In order for IFS to create and allocate credit facilities, financial resources ought to be present and sufficient. Conversely, persons in need of the credit facilities should be present with an ability to pay back the credit facilities in full to ensure the flow of financial assets is maintained sustainably. However, high rates of unemployment translate availability of credit facilities among persons without strengths and capabilities to payback. Consequently, the IFS is regarded as irrelevant and ignorant to economic needs among local global societies (Gail, 2011).
Interest rates increase due to inflation despite the policy makers seeking to guard the public from expecting such drastic measures. Inflations affect economies on private and global level. They increase unemployment, interest rates, and utility bills among households. Thus, inflation refers to increasing utilization of money without the money resource growing at an equally enhanced rate. As uses of money increase, the resource ought to increase and grow in order to maintain a balance. Monetary variables and inflation have maintained an economic relationship for decades. Inflation can be accounted in form of commodity prices, interest rates, asset prices and public debts. The growth rates and development of global economies have suffered through increments among all the above listed factors. Due to increased uses of money exceeding the resource, inflation occurs adversely impacting the balanced economies of trade (Luca, Huw & Ludger, 2012).
Global money inflation rates have resulted in increased domestic, industrialized, and liquidity economies. Although it is challenging to control inflation through commodity prices, global financial cost shocks as increasing asset prices can reduce inflation, public debt, and interest rates. The strategic decisions and policies formulated under IFS and implemented through IMS and the IMF ought to facilitate direct money growth and/or indirect reduction of commodity prices and inflation rates. As a result, IFS is closely monitored in order to account for every evolution in prices correlated to inflation (Luca, Huw & Ludger, 2012).
Budgets are forms of worry among people and nations as they seek to find appropriate methods of spending their earned incomes. Annual financial statements under budgetary programs, sundry proposals, and schemes either reduce or increase the amount of income based on the formulated and implemented fiscal policies. Fiscal policies impact economic growth positively. Fiscal policies are therefore remedies and stimulus for economic growth and development after financial crisis. They however need to be complimented through properly formulated and implemented management policies in order to be successful (Jaideep, 2008).
Global countries fail to formulate short-term and long-term fiscal policies aimed at reducing the debt levels in order to reduce economic burdens and impacts from financial crisis. Fiscal policies are therefore stabilization strategies credibly formulated and implemented to prevent, reduce and/or intervene against inflation rates. Due to increased demand rates, globalization, specialization of production, and lack of coordination between political and economic stabilizers have resulted in deficits and a deep financial crisis depth. Properly formulated and implemented fiscal policies control rise in aggregate demands, provide sufficient economic stimulus and less costly trade, and labor production specialization. More so, long-term fiscal policies can reduce inflation and unemployment rates on global levels thus, reducing financial strains. IFS should collaborate with global economies to reasonably formulate fiscal policies supporting economic growth and development equally and fairly (Jaideep, 2008).
Economies of Corruption
Several global nations and States are unable to grow and develop economically due to corruption. Corruption coupled with poverty has reduced the economic growth rate in such countries. Due to corruption, the countries continue to suffer from depreciated currencies, expensive imports, and red flags on balances of trade as well as reduced investments, employment rates and depreciating infrastructures. Corruption involves unethical activities undertaken among global institutions. Unethical and corrupt behaviors include unfair competition, bureaucratic opportunism, and illegal economic engagements (Rose & Tina, 2011).
Transparency International (TI) strives to prevent and end corruption globally. Corruption claims on IFS and global international legal systems should be scrutinized and addressed under intelligence judicial procedures. Laws and anti-corruption practices should be utilized to end corruption among global economic sectors. Corruption facilitates formation of incompetent, unproductive, and inequitable economies. Thus, it indicates deeper economic problems such as poor management, bankruptcy, and illicit revenues, earnings, and benefits. Data aligned to IMS and IMF should be utilized to improve economies (Rose & Tina, 2011).
The International Financial System influences various economic aspects among global nations. It regulates and supervises global economic factors to ensure resources are utilized effectively and sufficiently to foster economic growth and development. Although various economic issues highlight weaknesses within the International Financial System, it continues to strive to achieve the following measures. Foremost, to regulate economic stability rates, respond to economic threats, pressures and crises, and adjust to the changes. Thus, International Financial System aims to achieve economic growth, development, and stability among global nations.
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