International Finance
International finance, sometimes known as international macroeconomics, is the study of monetary interactions between two or more countries, focusing on areas such as foreign direct investment and currency exchange rates. International finance analyzes the following specific areas of study: **The Mundell-Fleming Model**, which studies the interaction between the goods market and the money market, is based on the assumption that price levels of said goods are fixed. **International Fisher Effect** is an international finance theory that assumes nominal interest rates mirror fluctuations in the spot exchange rate between nations. * These include the International Monetary Fund (IMF), a consortium of 189 countries dedicated to creating global monetary cooperation, and the International Bank for Reconstruction and Development, which later became known as the World Bank. International trade is arguably the most important influencer of global prosperity and growth. International finance, sometimes known as international macroeconomics, is the study of monetary interactions between two or more countries, focusing on areas such as foreign direct investment and currency exchange rates. An initiative known as the Bretton Woods system emerged from a 1944 conference attended by 40 nations and aims to standardize international monetary exchanges and policies in a broader effort to nurture post World War II economic stability.
What Is International Finance?
International finance, sometimes known as international macroeconomics, is the study of monetary interactions between two or more countries, focusing on areas such as foreign direct investment and currency exchange rates.
Understanding International Finance
International finance deals with the economic interactions between multiple countries, rather than narrowly focusing on individual markets. International finance research is conducted by large institutions such as the International Finance Corp. (IFC), and the National Bureau of Economic Research (NBER). Furthermore, the U.S. Federal Reserve has a division dedicated to analyzing policies germane to U.S. capital flow, external trade, and the development of global markets.
International finance analyzes the following specific areas of study:
Example of International Institutions of International Finance
The Bretton Woods System
The Bretton Woods system was created at the Bretton Woods conference in 1944, where the 40 participating countries agreed to establish a fixed exchange rate system. The collective goal of this initiative was to standardize international monetary exchanges and policies in a broader effort to create post World War II stability.
The Bretton Woods conference catalyzed the development of international institutions that play a foundational role in the global economy. These include the International Monetary Fund (IMF), a consortium of 189 countries dedicated to creating global monetary cooperation, and the International Bank for Reconstruction and Development, which later became known as the World Bank.
Special Considerations
International trade is arguably the most important influencer of global prosperity and growth. But there are worries related to the fact the United States has shifted from being the largest international creditor, to becoming the world's largest international debtor, absorbing excess amounts of funding from organizations and countries on a global basis. This may affect international finance in unforeseen ways.
International finance involves measuring the political and foreign exchange risk associated with managing multinational corporations.
Related terms:
Accounting
Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business to oversight agencies, regulators, and the IRS. read more
Bretton Woods Agreement & System
The Bretton Woods Agreement and System created a collective international currency exchange regime based on the U.S. dollar and gold. read more
European Monetary System (EMS)
The European Monetary System (EMS) was set up in 1979 to foster closer monetary policy co-operation between members of the European Community (EC). read more
International Monetary Fund (IMF)
The International Monetary Fund (IMF) is an international organization that promotes global financial stability, encourages international trade, and reduces poverty. read more
International Bank of Reconstruction and Development (IBRD)
The International Bank of Reconstruction and Development helps support countries looking to limit poverty and boost sustainable development. read more
Introduction to the International Finance Corporation
The International Finance Corporation (IFC) is an organization dedicated to helping the private sector within developing countries. read more
Marshall Plan
The Marshall Plan was a U.S.-sponsored program implemented after World War II to help European countries that had been destroyed in the conflict. read more
National Bureau of Economic Research (NBER)
The National Bureau of Economic Research is a private, non-profit, non-partisan research organization to promote a greater understanding of the economy. read more
Nixon Shock
Nixon Shock refers to the economic actions taken by President Richard Nixon in 1971 that eventually led to the collapse of the Bretton Woods system. read more
Super Currency
A super currency would replace the U.S. dollar as the world's reserve currency and form the basis for a new global monetary system. read more