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Essay / Research Paper Abstract
This 10 page paper looks at three different exchange rate mechanisms; the Gold Standard, the Brettron Woods Agreement and the European single currency, outlines their mechanisms and considers the way that these agreements may impact on the job of the treasurer/company accountant. The bibliography cites 4 sources.
Page Count:
10 pages (~225 words per page)
File: TS14_TEexcgrt.rtf
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Unformatted sample text from the term paper:
changes. One change that impacts on any international business is the way ion which exchange rates move. This economic change can turn a profit into a lose pr a lose
into a profit. In the past there have been measures adopted to try and reduce the level of this impact and create a more stable trading environment. Historically the best
known are the Gold Standard and the Bretton Woods Agreement. Currently there is also the single currency in Europe. These all impact on the business and the treasurer or accounts
plans within a businesses. Gold Standard The gold standard was a system where the different currencies were linked not to each other,
but to the price of gold. For example at one point the gold price was set in dollars at $20.67 for one ounce, whereas the United Kingdom set the rate
at 77 shillings and 10 1/2 old pence. As these were the days before decimalization (Anonymous, 2001). This was not quite so straight forward as there was an adjustment included
in here due to the fact that the United Kingdom gold was purity with a 91.7 percent purity, whilst United States gold was only 90% fine. The actual outcome was
a foxed rate of $4.55 to the ?1 (Anonymous, 2001). This mean that although each country would have its own currency their relative value would not be fluctuating and as
such trade between countries inside the area would be more stable, and fewer costs would be incurred. There is not need to hedge or hold foreign currency reserves. However, there
would the some costs in converting the currency. However, we can see how the impact of this was to fix the currencies
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