International Monetary System | 3 Terms Used

Every nation has a monetary system and a monetary authority. In the US, Federal Reserve Bank is the reserve authority. Here are some of the terms used used in such system

Exchange rates

The world monetary system in existence after world war till 1971, under which the value of US Dollar was tied to gold, and the values of other currencies were pegged to the US dollar. Exchange rates may be fixed or floating.

In 1971 fixed exchange rate system was replaced by a system under which US dollar was permitted to float

Devaluation 

The process of official reduction of the value of a country's currency relative to other currencies is known as devaluation. If that happens then fewer units of other currency will be required for buying one unit of devalued currency

Revaluation

The process of officially increasing the value of countries currency relative to other currency


Both devaluation and revaluation can be done only after the approval of IMF