International monetary system

International monetary systems are sets of internationally agreed rules, conventions and supporting institutions, that facilitate international trade, cross border investment and generally the reallocation of capital between nation states. They provide means of payment acceptable buyers and sellers of different nationality, including deferred payment. To operate successfully, they need to inspire confidence, to provide sufficient liquidity for fluctuating levels of trade and to provide means by which global imbalances can be corrected. The systems can grow organically as the collective result of numerous individual agreements between international economic factors spread over several decades. Alternatively, they can arise from a single architectural vision as happened at Bretton Woods in 1944.

Throughout history, precious metals such as gold and silver have been used for trade, termed bullion, and since early history the coins of various issuers – generally kingdoms and empires – have been traded. The earliest known records of pre - coinage use of bullion for monetary exchange are from Mesopotamia and Egypt, dating from the third millennium BC. Early money took many forms, apart from bullion; for instance bronze Spade money which became common in Zhou dynasty China in the late 7th century BC. At this time, forms of money were also developed in Lydia, Asia minor, from where its use spread to nearby Greek cities and later to the rest of the world.

Sometimes formal monetary systems have been imposed by regional rulers. For example, scholars have tentatively suggested that the ruler Servius Tullius created a primitive monetary system in the archaic period of what was to become the Roman Republic. Tullius reigned in the sixth century BC - several centuries before Rome is believed to have developed a formal coinage system.

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