Essay About British Monetary Systemsterling And Sterling Exchange Rate

The British Monetary System
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The British monetary systemSterling is the UKs standard currency unit, issued by the Bank of England, founded in 1694. Britain formally adopted the gold standard in 1821, and Sterling became the standard monetary unit in Britain. The First World War broke out in 1914, Britain abolished the gold standard, the gold coins ceased to circulate, and the British ceased to exchange gold. May 13, 1925, the British gold-standard system, and then because of the world economic crisis and was forced to give up on September 21, 1931, the pound evolved into an unfulfilled note. However, due to the need for foreign exchange controls, December 18, 1946 still stipulates the gold Sterling 3.58134 grams. By the beginning of the 20th century, Sterling had been the most important international means of payment and reserve currency in the capitalist world, and after the First World War, Sterlings status as an international reserve currency tended to decline and was gradually replaced by the dollar. During the outbreak of World War II, Britain imposed strict foreign exchange controls and fixed the sterling exchange rate at a level of 1 pounds to 4.03 dollars. July 15, 1947, the British announced the free exchange of sterling, due to the rapid loss of foreign exchange reserves, in August the same year resumed exchange controls. In September 1949, the British announced the devaluation of the pound by 30.5%, the pound against the United States dollar exchange rate to 2.80 U.S. dollars, November 18, 1967, the pound again devalued, against the U.S. dollar exchange rate reduced to 2.40 U.S. dollars, sterling Gold also reduced to 2.13281 grams. After the August 15, 1971 Dollar float, Sterling began to set a parity against the dollar based on unchanged gold content. After the official depreciation of the dollar on December 18 of the same year, the new official exchange rate of GBP to USD was 1 pounds for 2.6057 dollars. The real exchange rate can fluctuate from 1 pounds to $2.5471 to $2.6643, with a volatility of around 4.5%. March 19, 1973, the eight countries of western Europe formed a joint floating group, the United Kingdom did not participate, continue to float alone. In January of the following year, Sterlings real exchange rate system became a managed float. In the same year, the pound area narrowed, including only Britain, Ireland, Caimas, Is. and Channel Is.. Sterling is prepared for at least 2.65 billion pounds of gold. On the October 8, 1990, Sterling joined the European monetary System, with a 6% per cent fluctuation in the currencies of various currencies in the monetary system. September 16, 1992, Britain announced Sterling temporarily out of the European monetary system. February 22, 2013 Moodys credit rating company formally announced the downgrade of British debt, from AAA to AA1, after 2011 of the United States, 2012 France, now the turn to the United Kingdom. This is the first time Britain has lost the highest rating of an authoritative rating agency.In the 1990, Britain joined the new monetary system created by western European countries-the European exchange rate system, the essence of which is that the currencies of Western European countries are pegged to each other, when the 12 Member States of the European Union signed the Maastricht Treaty. The Treaty makes it clear that some European currencies, such as the pound sterling and the Italian lira, are overvalued, and that the central banks of these countries will face significant interest rate cuts or depreciation pressures, and can they be reconciled with the economically powerful Germany in terms of economic policy? All this left a hidden danger to the declining British economy.Soros and other speculators then stared at Sterling to prepare for the pound.Over time, the British Governments economic policy of maintaining high interest rates is under increasing pressure, asking the German Federal bank to lower interest rates, but the German Federal Bank is concerned that interest rate cuts could lead to domestic inflation and a possible economic meltdown, rejecting a request for interest rate cuts in the UK. Britains economy is declining and the British government needs to devalue sterling to spur exports, but the British government is constrained by the European exchange rate system and must struggle to keep the pound against mark. The UK Governments high interest rate policy has been questioned by many financial experts, and business leaders in the country have urged lower interest rates. The British government is miserable in the face of so much pressure.