International Accounting

1.0 The Role of Gold in International Monetary organization & The Relationship Between Gold Price and Value of Yuan Since the starting signal of civilization, favorable is widely regarded as an appealing metal, converted to be an object of beauty and quickly favoured by the upper classes (Mundell, 1999). contempt representing the noble statue of luxury, property has great malleability and high opponent to tarnish, making it irreplaceable in the monetary system. This report volition first discuss the role of gold in foreign monetary system during the course of history and in the good deal of future. Subsequently, the second part will examine the relationship of gold price and RMB value by recognizing US Dollar as the bridge between these two variables. 1.1 The role of gold in transnational monetary system 1.1.1 The Gold Exchange Standard (1870-1914) date back to 3000 B.C., gold had already been accepted as being currency and materialize social wealth as a store of value. Not until 1870s, the breakthrough of the first official international monetary system had made the role of gold substantial than ever.

During the period of gold standard, gold acted as the exchange medium, which was emerged from the British monetary system and consequently gained acceptance in both(prenominal) Western Europe and United States (Eichengreen, 2008). According to this standard, all active regions fixed the value of their local currencies with a specified essence of gold and allowed free convertibility at their own fixed similarity govern. For instance, the convertible rate of gold was $20.67 per ounce, while that of pound was pegged at £4.2474 per ounce, which made the dollar/pound exchange rate $4.8664/£ (Eiteman, 2010). This indicated that gold was an anchor to deterring exchange rate between currencies. Therefore, Central chamfer of each nation had to put the maintenance of gold militia in priority in order to stabilize convertibility rate between gold and fiat currency. 1.1.2 Interwar Gold Exchange Standard... If you pauperism to get a full essay, order it on our website: Orderessay

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