ASSIGNMENT

ON
INTERNATIONAL FINANCIAL
MANAGEMENT

SUBMITTED TO: SUBMITTED BY:

Prof. Amit Bhati Nisha Chhabariya

Faculty of Management U.ID – 0908031

DSM PGDM-V
 TOPIC I- INDIAN FOREX MARKET

(A) HISTORY:
It all began with The Bretton Woods Agreement which was signed in 1944.
Agreement aimed at setting up international monetary stability by preventing
money from flying across nations and restricting speculations with the world
currencies. Before the agreement was introduced, the gold exchange standard (used
between 1876 and World War I) dominated the international economical system.
Under the gold exchange world currencies gained a new level of stability since
they were backed up by the price of gold. It ruined the traditional old practice used
by kings of arbitrarily debasing money and triggering inflation. However, gold
exchange standard had its own weak points. As a particular economy gained
strength, it would import mainly from abroad until it runs down gold reserves
required to back up the money.

Hence, money supply would shrink, interest rates would rise

and economic activity would slow down to the extent of recession. Ultimately,
prices of goods had hit bottom, appearing attractive to other nations, which would
rush into buying sprees that injected the economy with gold until it increased its
money supply, and drive down interest rates and recreate wealth into the economy.
Such boom-bust patterns prevailed throughout the gold standard until the outbreak
of World War I interrupted trade flows and the free movement of gold.
After the Wars, the Bretton Woods Agreement was founded and participating
countries agreed to try to maintain the value of their currency with a small margin
against the dollar. It was forbidden for countries to devalue their currencies to their
advantage and they could do so only for devaluations smaller than 10%. During
fifties the constantly expanding volume of international trade led to massive
movements of capital from post-war construction. It destabilized foreign exchange
rates as set up in the original agreement.

Finally, in 1971 the Agreement was abandoned, and the US dollar was longer be
freely convertible to gold. In 1973 currencies of major industrialized countries
became more freely floating - driven mainly by the forces of supply and demand of
the foreign exchange market. Prices started to float on daily basis, with volumes,
speed and price volatility increasing throughout the seventies, giving a good start to
new financial instruments, market deregulation and trading liberalization.In the
eighties cross-border capital movements accelerated with the advent of computers
and technology, extending market continuum through Asian, European and
American time zones. Transactions in foreign exchange rocketed from about
billion a day in the 1980s, to more than half trillion a day two decades later.

INTRODUCTION:

Forex (Foreign Exchange) is the international financial market used for trade of
world currencies. It has been working since 70s of the 20th century - from the
moment when the biggest world nations decided to switch from fixed exchange
rates to floating ones. Daily volume of Forex trade exceeds 4 trillion United States
dollars, and this number is always growing.
Main currency for Forex operations is the United States dollar (USD).

• Main Forex market participants:

- Central banks of countries;

- Commercial banks;
- Investing banks;
- Brokers, dealers;
- Pension funds;
- Insurance companies;
- International corporations;
- Individuals.

Unlike stock exchanges, Forex market doesn't have any fixed schedule or operating
hours - it's open 24 hours per day, 5 days per week from Monday to Friday, since
buy/sell orders are performed by world banks any time during the day or night
(some banks even work on Saturdays and Sundays). Just like any other exchange,
Forex market is driven by supply and demand of a particular tool. For instance,
there are buyers and sellers for "Euro vs US dollar".

Exchange rates at Forex are changing constantly, and fluctuations may happen
many times per second - this market is very liquid.

Exchange rates are influenced by:

- Economical factors (economical indicators of countries at the moment, politics of

Central banks, changing interest rates, behavior of importers and exporters, etc);
- Political factors (speeches of political leaders, president elections, etc);
- Market participants' mood and feelings, their expectations, rumours, etc;
- Force-major events (terroristic acts, accidents, catastrophes, etc).

Nevertheless, Forex market is much more stable than stock exchanges - it is not
subject to huge surges, even if one currency is declining, another one is improving.

One of big advantages of the market is its' close relation with latest information
technologies. Clients from different parts of the planet may connect to Internet and
start trading. Even big banks tend to use electronic trading - it's the most common
way of trading now. At this moment, Forex is at the rapid developing phase, and
it's expected to grow more and more in the future.

Some of the advantages of Forex market over stock markets and/or other equities
include:

- Traders can make profits both on declining and developing economies;

- Traders can make very short-term orders - with some other markets there are
certain regulations;
- Thanks to retail centers like "Forex 4 You", it's much easier to join Forex market
- virtually no minimum capital, quick registration, etc;
- Market is not regulated;
- There are no broker commissions or they are very low;
- Much higher leverages are provided;
- Market works non-stop 24 hours.
(B)LANDMARK REGULATIONS:

 FOREX REGULATION:

India has liberalized its foreign exchange controls. Rupee is freely convertible on
current account. Rupee is also almost fully convertible on capital account for non-
residents. Profits earned, dividends and proceeds out of the sale of investments are
fully repatriable for FDI. There are restrictions on capital account for resident
Indians for incomes earned in India. The Reserve Bank of India's Foreign
Exchange Department administers Foreign Exchange Management Act
1999(FEMA). Foreign Exchange Management (transfer of securities to any person
resident outside India) Regulation as amended from time to time regulates transfer
for issue of any security by a person resident outside India.

The world of forex trading is a world where a lot of money changes hands, which
makes sense seeing as it is a market of currency trading. To make sure that things
don't get out of hand, the forex market has a lot of very strict forex regulations and
forex policies that keep traders and financial bodies in check. These forex
regulations are maintained and monitored by various official international bodies
whose job it is to make sure that forex providers stick to the forex regulations in
anything they do. However, seeing as the internet is a vast informational space that
is difficult to monitor and control, there will always be forex brokers and service
providers who disregard forex regulations and get away with dealing in way
contrary to the official policies of the regulatory bodies.

The People in Charge of Forex Regulation

 • The NFA – the National Futures Association. The NFA is a self-regulatory
organization for the US futures industry. Its purpose is to safeguard market
integrity and protect investors by implementing forex regulations.
Membership in NFA is mandatory for any futures or forex broker operating
in the US .It is an independent regulatory body with no ties to any specific
marketplace.
• The CFTC – the Commodity Futures Trading Committee. Created by
congress, the Commodity Futures Trading Commission (CFTC) was formed
in 1974 as an independent agency with the mandate to issue forex
regulations for financial markets in the United States. The CFTC's forex
regulations assure the economic utility of the markets by encouraging their
competitiveness and efficiency, and protecting market participants against
and abusive forex trading practices.
• The FSA - The Financial Services Authority. This is a UK based
independent body, given statutory powers by the Financial Services and
Markets Act 2000. The FSA regulates the financial services industry in the
UK, which is made possible by the FSA's regulation making, investigatory
and enforcement powers. The FSA is obliged to have regard to the Principles
of Good Regulation.
• Various National Authorities – each country has its own national body for
regulating its financial service industry. These are the bodies that decide on
forex regulations, you must therefore make sure that your forex broker is
licensed in the country from which they operate. This ensures that they are
obliged to operate in accordance to that country's forex trading regulations.

Forex Regulations for Forex service providers

 • A forex broker/ dealer / service provider must be licensed in the country in
which their operations are based. This is a very important forex regulation to
look out for, since if the broker you are looking into isn't licensed, they are
operating against the law.
• Being approved by the national regulatory institutions ensures that the
broker must maintain strict quality control standards and that your business
with the broker is safe, fair and honest.
• By regulation, licensed forex brokers are subject to periodical audits,
reviews and evaluations which enforce their need to comply to industry
standards.
• Forex brokers must maintain a sufficient amount of funds to meet their
customers' needs. This forex regulation ensures that the forex broker is able
to execute and complete forex contracts made with their clients.
• Forex brokers are in no way allowed to misrepresent their services or to
solicit customers to trade forex without a fair representation of the risks
involved. Be wary of brokers who promise profits in the forex market, since
by forex regulation they are not in any position to do so. No broker can
guarantee profits in the forex market.
• A Forex broker is obliged to honor each and every forex contract (position)
opened by a client. Failure to complete the forex contract with a client will
lead to the revoking of the broker's license.

Repatriation of investment capital and profits earned in India

(i) All foreign investments are freely repatriable, subject to sectoral policies and
except for cases where Non Resident Indians choose to invest specifically under
non-repatriable schemes. Dividends declared on foreign investments can be
remitted freely through an Authorized Dealer.
(ii) Non-residents can sell shares on stock exchange without prior approval of RBI
and repatriate through a bank the sale proceeds if they hold the shares on
repatriation basis and if they have necessary NOC/ tax clearance certificate issued
by Income Tax authorities.
(iii) For sale of shares through private arrangements, Regional offices of RBI grant
permission for recognized units of foreign equity in Indian company in terms of
guidelines indicated in Regulation 10.B of Notification No. FEMA.20/2000 RB
dated May ?000. The sale price of shares on recognized units is to be determined in
accordance with the guidelines prescribed under Regulation 10B(2) of the above
Notification.
(iv) Profits, dividends, etc. (which are remittances classified as current account
transactions) can be freely repatriated.

Acquisition of Immovable Property by Non-resident

A person resident outside India, who has been permitted by Reserve Bank of India
to establish a branch, or office, or place of business in India (excluding a Liaison
Office), has general permission of Reserve Bank of India to acquire immovable
property in India, which is necessary for, or incidental to, the activity. However, in
such cases a declaration, in prescribed form (IPI), is required to be filed with the
Reserve Bank, within 90 days of the acquisition of immovable property.

Foreign nationals of non-Indian origin who have acquired immovable property in

India with the specific approval of the Reserve Bank of India cannot transfer such
property without prior permission from the Reserve Bank of India. Please refer to
the Foreign Exchange Management (Acquisition and transfer of Immovable
Property in India) Regulations' 2000 (Notification No. FEMA.21/ 2000-RB dated
May 3, 2000).

Acquisition of Immovable Property by NRI

An Indian citizen resident outside India (NRI) can acquire by way of purchase any
immovable property in India other than agricultural/ plantation /farm house. He
may transfer any immovable property other than agricultural or plantation property
or farm house to a person resident outside India who is a citizen of India or to a
Person of Indian Origin resident outside India or a person resident in India.

 FOREIGN EXCHANGE MANAGEMENT ACT

Tarapore committee on capital a/c convertibility:

Tarapore Committee on Capital Account Convertibility appointed in February,

1997 defines Capital Account Convertibility as the “freedom to convert local
financial assets into foreign financial assets and vice versa at market determined
rates of exchange”. In other terms we can say Capital Account Convertibility
(CAC) means that the home currency can be freely converted into foreign
currencies for acquisition of capital assets abroad and vice versa.

Background of Capital Account Convertibility:

Foreign exchange transactions are broadly classified into two types: current
account transactions and capital account transactions. In the early nineties, India’s
foreign exchange reserves were so low that these were hardly enough to pay for a
few weeks of imports. To overcome this crisis situation, Indian Government had to
pledge a part of its gold reserves to the Bank of England to obtain foreign
exchange. However, after reforms were initiated and there was some
improvement on FOREX front in 1994, transactions on the current account were
made fully convertible and foreign exchange was made freely available for such
transactions. But capital account transactions were not fully convertible. The
rationale behind this was clear. That India wanted to conserve precious foreign
exchange and protect the rupee from volatile fluctuations.

By late nineties situation further improved, a committee on capital account

convertibility was setup in February, 1997 by the Reserve Bank of India (RBI)
under the chairmanship of former RBI deputy governor S.S. Tarapore to "lay the
road map" to capital account convertibility. The committee recommended that full
capital account convertibility be brought in only after certain preconditions were
satisfied. These included low inflation, financial sector reforms, a flexible
exchange rate policy and a stringent fiscal policy. However, the report was not
accepted due to Asian Crisis.

The five-member committee has recommended a three-year time frame for

complete convertibility by 1999-2000. The highlights of the report including the
preconditions to be achieved for the full float of money are as follows:-

Pre-Conditions Set By Tarapore Committee:

• Gross fiscal deficit to GDP ratio has to come down from a budgeted 4.5 per
cent in 1997-98 to 3.5% in 1999-2000.
• A consolidated sinking fund has to be set up to meet government's debt
repayment needs; to be financed by increased in RBI's profit transfer to the
govt. and disinvestment proceeds.
• Inflation rate should remain between an average 3-5 per cent for the 3-year
period 1997-2000
• Gross NPAs of the public sector banking system needs to be brought down
from the present 13.7% to 5% by 2000. At the same time, average effective
CRR needs to be brought down from the current 9.3% to 3%.
• RBI should have a Monitoring Exchange Rate Band of plus minus 5%
around a neutral Real Effective Exchange Rate RBI should be transparent
about the changes in REER.
• External sector policies should be designed to increase current receipts to
GDP ratio and bring down the debt servicing ratio from 25% to 20%.
• Four indicators should be used for evaluating adequacy of foreign exchange
reserves to safeguard against any contingency. Plus, a minimum net foreign
 asset to currency ratio of 40 per cent should be prescribed by law in the RBI
Act.
• Phased liberalization of capital controls

 RECOMMEDATIONS OF TARAPORE COMMITTE

ON CAPITAL ACCOUNT CONVERTIBILITY

A committee on capital account convertibility was setup by the Reserve

Bank of India (RBI) under the chairmanship of former RBI deputy governor
S.S. Tarapore to "lay the road map" to capital account convertibility. In
1997, the Tarapore Committee had indicated the preconditions for Capital
AccountConvertibility. The three crucial preconditions were fiscal
consolidation a mandated inflation target and strengthening of the financial
system.

The five-member committee has recommended a three-year time frame for

complete convertibility by 1999-2000. The highlights of the report including
the preconditions to be achieved for the full float of money are as follows:-

Pre-Conditions

Gross fiscal deficit to GDP ratio has to come down from a budgeted 4.5 per
cent in 1997-98 to 3.5% in 1999-2000.
 A consolidated sinking fund has to be set up to meet government's debt
repayment needs; to be financed by increased in RBI's profit transfer to the
govt. and disinvestment proceeds.

Inflation rate should remain between an average 3-5 per cent for the 3-year
period 1997-2000

Gross NPAs of the public sector banking system needs to be brought down
from the present 13.7% to 5% by 2000. At the same time, average effective
CRR needs to be brought down from the current 9.3% to 3%

RBI should have a Monitoring Exchange Rate Band of plus minus 5%

around a neutral Real Effective Exchange Rate RBI should be transparent
about the changes in REER

External sector policies should be designed to increase current receipts to

GDP ratio and bring down the debt servicing ratio from 25% to 20%
Four indicators should be used for evaluating adequacy of foreign exchange
reserves to safeguard against any contingency. Plus, a minimum net foreign
asset to currency ratio of 40 per cent should be prescribed by law in the RBI
Act.

(c) STRUCTURE OF FOREX MARKET:

(I) Transaction by RBI and authorized Dealer:

In order to trade in Forex one has to convert currency first because there are no
interesting pairs with rupees (in fact, there are pairs with rupees appearing now but
they are not going to be very popular among Forex traders due to a number of
factors), but in India there is no free conversion of the national currency! Luckily,
RBI has been softening foreign exchange rules in recent years and now every
Indian is allowed to exchange rupees for up to 200,000 USD per year without
giving any justification. So one can say - voila, any Indian can trade in Forex for
this amount now.

But RBI guidelines say that Indian citizens cannot use this 200,000 allowance for
margin calls. What is a margin call? Margin call is the amount you put on your
balance at the Forex broker! So basically, you cannot transfer money for Forex
trading, even though you can make transfers in general.

So what are the options? Semi-legal option is to specify other reason of transfer -
instead of margin call, you call it "investment in futures" or whatever. I call it
semi-legal because you're going to lie, but on another side - it's not going to be
possible, at least not that easy, to verify.

Another, absolutely legal option is to ask a friend of yours who is either a NRI or a
foreigner to transfer money for you, because they don't have these limitations.

There is also a "grey" option - to use online currencies like e-gold. They are not
regulated by any government, legally speaking - they don't exist. So you can use
them without breaking any laws, but your government is not going to help you in
case of problems with broker - you simply won't be able to prove that you had any
money on account.
LIST OF AUTHORISED DEALERS CATEGORY-I
Sl. No. Name and Address of the Entity
1. The Royal Bank of Scotland N.V.
31/32, 3rd Floor, Sakhar Bhavan, Nariman Point, Mumbai 400 021
2. Abu Dhabi Commercial Bank Ltd.
Foreign Exchange Department, 75 B, Rehmat Manzil, Veer Nariman Road,
Mumbai- 400 020
3. Allahabad Bank,
Foreign Department, Head Office, Gillander House, Ground Floor, Block F,
8, N.S.Road, Kolkata-700001
4. Andhra Bank,
International Banking Division, 8F, Maker Towers, Cuffe Parade, Mumbai-
400 005.
5. Antwerp Diamond Bank NV
Mumbai Branch, 2nd Floor, Engineering Centre, 9, Mathew Road, Opera
House, Mumbai-400 004.
6. AB Bank Limited
Liberty Building, 41-42, Sir Vithaldas T Marg, New Marine Lines, Mumbai
400 020.
7. Axis Bank Ltd.
Maker Towers `F' Block, 13th floor, Cuffe Parade,
Mumbai 400 005
8. Bank Internasional Indonesia
Treasury Department, Amerchand Mansion, Ground floor, Madame Cama
Road, Colaba, Mumbai 400 039
9. Bank of America NA
Treasury Department , Express Towers, Nariman Point, Mumbai 400 021
Bank of Bahrain & Kuwait PSC
Foreign Exchange Department , Jolly Maker Chambers II, Ground floor,
10. 225, Nariman Point, Mumbai 400 021
11. Bank of Baroda
International Division, C-26, G-Block, Bandra-Kurla Complex, Bandra (E),
Mumbai-400 051.
12. Bank of Ceylon
Treasury Department , 1090 Poonamallee High Road, Chennai 600 084.
13. Bank of India
Foreign Business Department, Star House, 3rd Floor, C-5, G Block,
Bandra-Kurla Complex, Bandra (E), Mumbai-400 051.
14. Bank of Maharashtra
International Division, 24, Maker Chambers III, 2nd Floor,
 Nariman Point, Mumbai 400 021
15. Bank of Tokyo-Mitsubishi UFJ Ltd.
Risk Management Department, Jeevan Vihar Building, 3, Parliament Street,
New Delhi-110 001.
16. Barclays Bank PLC
Foreign Exchange (Treasury), 21/23, Maker Chamber VI,
Nariman Point, Mumbai 400 021
17. BNP Paribas
Treasury Department, 62, Homji Street, Fort, Mumbai 400 001
18. Bombay Mercantile Co-Op. Bank Ltd.
Forex Department, 4th Floor, Uttam House, 69, P. D'Mello Road, Carnac
Bunder, Mumbai-400009
19. Calyon Bank
Mumbai Branch, 11th Floor, Hoechst House, Nariman Point, Mumbai-
400021
20. Canara Bank
International Division, Maker Chambers III, 7th Floor, Nariman Point,
Mumbai 400 021
21. The Catholic Syrian Bank Ltd. ,
International Banking Division, P.B.No.1156, Market Road, Kochi 682 011,
Kerala
22. Central Bank of India
International Division, Chander Mukhi, 5th Floor, Nariman Point, Mumbai
400 021
23. Chinatrust Commercial Bank
Treasury Department, 21A, Janpath, New Delhi 110 001
24. Shinhan Bank
Foreign Exchange Department, 42, Jolly Maker Chambers II, 4th Floor,
225, Nariman Point, Mumbai- 400021
25. Citi Bank N.A.
Treasury Deptt., 5th floor, C-61,Bandra Kurla Complex, G Block, Bandra
(East), Mumbai -400051
26. City Union Bank Ltd.
International Banking Division, 706, Anna Salai, Chennai 600 006
27. Corporation Bank
International Banking Division, 15, Mittal Chambers, Nariman Point,
Mumbai 400 021.
28. Dena Bank
International Division, Bombay Main Office Bldg., 17, Horniman Circle,
 Fort, Mumbai 400 023.
29. Deutsche Bank A.G.
Foreign Exchange Department, D.B. House, Hazarimal Somani Marg, Post
Box No.1142, Fort, Mumbai 400 001
30. DBS Bank Ltd.
Mumbai Branch, 3rd floor, 221, Dr. D.N. Road, Fort , Mumbai 400 001.
31. Development Credit Bank Ltd.
Corporate & Registered Office, 301, Trade Plaza, 414, Veer Savarkar
Marg, Prabhadevi, Mumbai 400 025.
32. HDFC Bank Ltd.
Treasury Department, Sandoz House, 1st Floor, Dr. A.B. Road, Worli,
Mumbai- 400018
33. The Hongkong Sanghai Banking Corporation
Treasury Services, 52/60, M.G.Road, Mumbai 400 001.
34. ICICI Bank Ltd.
Treasury Deptt., ICICI Bank Towers, Bandra-Kurla Complex, Bandra (E),
Mumbai-400 051.
35. IDBI Bank Ltd.
International Banking Division, IDBI Tower, WTC Complex, Cuffe Parade,
Mumbai-400 005.
36. Indian Bank
International Division, H.O., 66, Rajaji Salai, Chennai- 600 001
37. Indian Overseas Bank
Foreign Exchange Department, C.O., 763, Anna Salai, Chennai 600 002

IndusInd Bank Ltd.

International Division, IndusInd House, 4th Floor, 425, Dr. Dadasaheb
Bhadkamkar Marg, Mumbai 400 004
39. ING-Vysya Bank Ltd.
Treasury Department, 4th Floor, ING Vysya House, 22, M.G. Road,
Bangalore.
40. JP Morgan Chase Bank N.A.
Mumbai Branch, Mafatlal Centre, 9th Floor, Nariman Point, Mumbai-21
41. The Karnataka Bank Ltd.
International Division, 107/109, Raheja Centre, Free Press Journal Marg,
Nariman Point, Mumbai- 400021
42. The Karur Vysya Bank Ltd.
International Division, 568 (II Floor), Anna Salai, Teynampet, Chennai 600
 018.
43. Kotak Mahindra Bank Ltd.
36-38A, Nariman Bhavan, 227, Nariman Point, Mumbai-400 021.
44. Krung Thai Bank Public Company Limited
62, Maker Chambers VI, 6th floor, Nariman Point, Mumbai 400 021.
45. The Maharashtra State Co.op. Bank Ltd.
International Banking Division, Y.B. Chavan Centre, General Jagannath
Bhonsale Marg, Near Sachivalaya Gymkhana, Mumbai-400 021.
46. Mashreq Bank P.S.C.
Bombay Branch, 602/603/604, Tulsiani Chambers, 6th Floor, Nariman
Point, Mumbai-400 021.
47. Mizuho Corporate Bank Ltd
Mumbai Branch, Maker Chambers III, 1st floor, Jamnalal Bajaj Road,
Nariman Point, Mumbai 400 021.
48. Oman International Bank SAOG
201, Raheja Centre, Free Press Journal Marg, Nariman Point, Mumbai-
400021
49. Oriental Bank of Commerce
International Banking Division,
F-14, IVth Floor, Competent House, Connaught Place, New Delhi- 1
50. Punjab and Sind Bank
Foreign Exchange Department, H.O., IInd Floor, Scindia House, Connaught
Circus, New Delhi 110 001
51. Punjab National Bank
International Banking Division, H.O., 7, Bhikhaji Cama Place, New Delhi
110 066.
52. The Saraswat Co-op. Bank Ltd.
International Banking Division, Kimatrai Bldg., 1st floor,
77/79, Maharshi Karve Road, Marine Lines, Mumbai 400 002
53. SBI Commercial & International Bank Ltd. ,
Maker Chamber III, Nariman Point, Mumbai 400 021
54. Societe Generale
Treasury Deptt., Maker Chambers IV, Ground floor, Bajaj Marg,
P.B.No.1635, Nariman Point, Mumbai 400 021
55. Sonali Bank Limited
15, Park Street, Kolkata-700 016
56. Standard Chartered Bank
23-25, M.G.Road, P.O.Box No.558, Mumbai- 400 001
57. State Bank of Bikaner & Jaipur
International Banking Department, Marshall House, 1st floor, 33/1, Netaji
Subhash Road, Kolkata-700 001
58. State Bank of Hyderabad
Treasury Department, 7th Floor, SBI LHO, Bandra-Kurla Complex,
Bandra(E), Mumbai- 400051
59. State Bank of India
International Division, C.O., P.B.No.10121, Madam Cama Road, Mumbai-
400 021
60. State Bank of Mauritius Ltd.
Treasury Deptt., 101, Raheja Centre, Free Press Journal Road, Nariman
Point, Mumbai- 400021
61. State Bank of Mysore
H.O., Foreign Department, K.G.Road, BKG Complex, Bangalore- 560 009.
62. State Bank of Patiala
H.O. Foreign Exchange Department, Bank House, 3rd Floor, 21, Rajendra
Place, New Delhi- 110008
63. State Bank of Travancore
Forex Department, P.B.No.3639, Ernakulam- 682 035, Kerala
64. Syndicate Bank
International Division, Maker Towers, `F' , 2nd floor, Cuffe Parade, Colaba,
Mumbai-400 005
65. Tamilnad Mercantile Bank Ltd.
International Banking Division, 3rd Floor, Plot No.4923, AC/16, Second
Avenue, Anna Nagar, Chennai-600 040.
Bank of Nova Scotia
Foreign Exchange Department, Mittal Towers, B Wing, Ground floor,
66. P.O.Box 11507, Nariman Point, Mumbai-400 021
67. The Dhanalaxmi Bank Ltd.
Dhanalaxmi Building, P.B.No.9, Trichur-680 001, Kerala.
68. The Federal Bank Ltd.
International Banking Department, Federal Towers, Marine Drive,
Ernakulam-682031, Kerala
69. The Jammu & Kashmir Bank Ltd.
International Division, 5, Merchant Chambers,
41, New Marine Lines, Mumbai 400 020
70. The Laxmi Vilas Bank Ltd.
International Division, 25/31, Aban House, Sai Baba Marg, Kalaghoda,
Fort, Mumbai-400 023.
71. The South Indian Bank Ltd.
Foreign Exchange Department, C.O., Dharmodayam Building, Shanmugam
Road, Kochi- 682031, Kerala
72. UCO Bank
International Division, Head Office, 10, Biplabi Trailokya Maharaj Sarani,
Kolkata - 700 001
73. Union Bank of India
International Banking Division, 9th Floor, Union Bank Bhavan, 239,
Vidhan Bhavan Marg, Nariman Point, Mumbai- 400021
74. United Bank of India
International Banking Division, Head Office (14th Floor), 16, Hemanta
Basu Sarani, Kolkata 700 001
75. Vijaya Bank
International Banking Division, Head Office, 41/2, M.G. Road, Trinity
Circle, Bangalore- 560001
76. Yes Bank Ltd.
Treasury Deptt., Nehru Centre, 10th floor, Discovery of India, Dr. A.B.
Road, Worli, Mumbai-400 018.
77. The Cosmos Cooperative Bank Limited
Head Office, “ Cosmos Heights” , 269/270, Shaniwar Peth,
Chimaji Appa Peshwe Chowk, Pune- 411030
78. The Kalupur Commercial Cooperative Bank Limited
‘Kalupur Bank Bhavan’, Nr. Income Tax Circle, Ashram Road,
Ahmedabad- 380014

79. Abhyudaya Co-op Bank Limited

Admn. Office : K.K. Tower, Abhyudaya Bank Lane, Off. G.D. Ambekar
Marg, Parel Village, Mumbai- 400012
80. The Shamrao Vithal Co-operative Bank Limited
Corporate Office: SVC Tower, Nehru Road, Vakola, Santacruz(E),
Mumbai- 400055
81. JSC VTB Bank
The Taj Mahal Hotel, Mezzanine Floor, Number One, Mansingh Road,
New Delhi- 110011
82. The Bharat Co-operative Bank (Mumbai) Limited
Central Office : ‘ Marutagiri’, Plot No. 13/9A, Samant Estate, Sonawala
Road, Goregaon (E), Mumbai- 400063
83. U B S AG
3/F, 2 North Avenue, Maker Maxity, Bandra-Kurla Complex, Bandra(East),
 Mumbai- 400051
84. FirstRand Bank Ltd
5th Floor, Mistry Bhavan, 122, Dinsha Vachha Road, Churchgate,
Mumbai- 400020
85. Commonwealth Bank of Australia
Level 2, Hoechst House, Nariman Point, Mumbai- 400021
86. The Thane Janata Sahakari Bank Limited
Head Office : Madhukar Bhavan, Road No. 16, Wagle Estate, Thane-
400604
87. United Overseas Bank Limited
3 North Avenue, Maker Maxity, Unit 31 & 37, 3rd Floor, ‘C’ Wing,
Bandra-Kurla Complex, Bandra (East), Mumbai- 400051
88. Credit Suisse AG
10th Floor, Ceejay House, Plot F, Ceejay House, Plot F, Shivsagar Estate,
Dr. A.B. Road, Worli, Mumbai- 400018

LIST OF AUTHORISED DEALERS CATEGORY-II

Sl. No. Name and address of the entity
1. Thomas Cook(India) Limited,
Thomas Cook Building, Dr. D.N. Road, Fort, Mumbai- 400001.
2. UAE Exchange & Financial Services Limited,
N.G. 12 & 13, Ground Floor, North Block, Manipal Centre,
Dickenson Road, Bangalore.
3. Green Channel Travel Services,
5/6, Sun Complex, Near Stadium Circle, Navrangpura, Ahmedabad- 380009.
4. Cox & Kings Ltd.,
Turner Morrison Building, 16, Bank Street, Fort, Mumbai- 400023
5. Wall Street Finance Limited
Unit No. 101/112, 1st Floor, Chintamani Plaza, Andheri-Kurla Road, Chakala,
Andheri (E), Mumbai- 400099
6. Weizmann Forex Limited
Centenary Building, IV Floor, # 28, M.G. Road, Bangalore- 560001
7. Vadilal Industries Limited
Forex-FFMC Division, Vadilal House, Nr. Navarangpura Rly. Crossing,
Ahmedabad- 380009
8. Prathama Bank
Head Office, Moradabad- 244001, Uttar Pradesh
9. Citizencredit Coop. Bank Limited
Central Administrative Office, ‘Helena’ 57, Mt. Carmel Road, Bandra(West),
Mumbai- 400050
10. ACE Cooperative Bank Limited
Head Office, Old Airport, Santacruz(East), Mumbai- 400029
11. Manappuram General Finance and Leasing Limited
‘Manappuram House’, P.O. Valapad, Thrissur, Kerala- 680567
12. The A.P. Mahesh Cooperative Urban Bank Limited
Head Office, 5-3-989, 3rd Floor, Sherza Estate, N.S. Road, Hyderabad-
500095
13. New India Cooperative Bank Limited
New India Bhavan, Aanant Vishram Nagwekar Marg, Babasaheb Worlikar
Chowk, Prabhadevi, Mumbai- 400025

14. Punjab and Maharashtra Cooperative Bank Limited

1, Sardar Pratap Singh Ind. Estate, L.B.S. Marg, Bhandup (W), Mumbai-
400078
15. Thane Bharat Sahakari Bank Limited
Ground Floor, Sahayog Mandir, Sahayog Mandir Path, Ghantali, Naupada,
Thane- 400602
16. NKGSB Coop. Bank Limited
Laxmi Sadan, 361, Vithalbhai Patel Road, Girgaum, Mumbai- 400004
17. The Zoroastrian Co-operative Bank Limited
Nirlon House, 5th Floor, Dr. Annie Besant Road, Worli, Mumbai- 400030
18. Prime Co-operative Bank Limited
Control Centre, 2nd Floor, Meridian Tower, Udhna Darwaja, Khatodara,
Surat- 395002, Gujarat
19. Muthoot Exchange Company Private Limited
III Floor, Kurien Towers, Opp. Saritha Theatre Complex, Banerji Road,
Kochi- 682018, Kerala
20. The Mahanagar Cooperative Bank Limited
Ground Floor, Hiramani Super Market, Dr. B.A. Road, Lalbaug, Mumbai-
400012
21. R.R. Sen & Bros (P) Limited
11D, Kabitirtha Sarani, Kolkata- 700023
22. The Mehsana Urban Co-operative Bank Limited
Head Office: Urban Bank Road, Highway, Mehsana- 384002, Gujarat
23. Paul Merchants Limited
S.C.O. 829-30, Sector 22-A, Chandigarh- 160022
24. FCH CentrumDirect Limited
Centrum House, 5445-A, CST Road, Vidya Nagari Marg, Kalina, Santa Cruz
(East), Mumbai- 400098
25. Rajkot Nagarik Sahakari Bank Limited
Nagarik Bhavan-1, Dhebarbhai Road, Rajkot- 360001
26. The Darussalam Cooperative Urban Bank Limited
H.O. Darussalam, Hyderabad- 500001, Andhra Pradesh
27. Mercury Travels Limited
Everest House, 46C, Chowringhee Road, Kolkata- 700071
28. The Kakinada Cooperative Town Bank Limited
H.O. Ramaraopeta, Kakinada- 533004, Andhra Pradesh
29. Pheroze Framroze & Company Private Limited
Kalpataru Chambers, First Floor, 6 Nanik Motwane Marg, Fort, Mumbai-
400001
30. The Greater Bombay Cooperative Bank Limited
‘Baldota Bhavan’, 3rd Floor, 117, Maharshi Karve Marg, Churchgate,
 Mumbai- 400020
31. The Sahebrao Deshmukh Cooperative Bank Limited
103, Trade Corner, Sakinaka Junction, Andheri(E), Mumbai- 400072
32. Deccan Grameena Bank
H.O. 9-27/1, First Floor, Lalitha Nagar, Dilsukhnagar, Hyderabad- 500060
33. Prithvi Softech Limited
No. 33, Montieth Road, Egmore, Chennai- 600008
34. VKC Credit and Forex Services (P) Limited
First Floor, “Aishwareya Complex”, No. 1, West Road, West C.I.T. Nagar,
Chennai- 600035
35. The Bhatkal Urban Cooperative Bank Limited
P.B. No. 15, 66/1, Main Road, Bhatkal- 581320,Karnataka
36. Department of Posts
The Deputy Director, Ministry of Communication & Information Technology,
Department of Posts, Govt. of India, Financial Services Division, Room
No.325, Dak Bhavan, Parliament Street, New Delhi-1
37. Muthoot Fincorp Limited
Muthoot Centre, Punnen Road, Thiruvananthapuram- 695034
38. The Visakhapatnam Cooperative Bank Limited
Main Road, Visakhapatnam- 530001, Andhra Pradesh
39. Travel Tours Private Limited
1/1, Miller’s Arcade, Miller’s Road, Vasanthnagar, Bangalore- 560052
40. Supreme Securities Ltd
3rd Floor, R.D. Chambers, 16/11, Arya Samaj Road, Karol Bagh, New Delhi-
110 005.

LIST OF AUTHORISED DEALERS CATEGORY-III

 Sl. No. Name and address of the entity
1. Clearing Corporation of India Limited,
7th Floor, Trade World, 'C' Wing, Kamala City, S.B. Marg,
Lower Parel (W), Mumbai- 400013.

2. Export Import Bank of India

Post Bag No. 16100, Centre One 21st Floor, World Trade Centre,
Cuffe Parade, Mumbai- 400005

3. Small Industries Development Bank of India

Industrial Finance Department, Nariman Bhavan,
227, K. Vinay K. Shah Marg, Nariman Point, Mumbai- 400021

4. Industrial Finance Corporation of India Ltd.

IFCI Tower, 61, Nehru Place, New Delhi- 110019.

5. IFCI Factors Limited,

Pawan House. 2, Zamrudpur Community Centre, Kailash Colony Extension,
New Delhi- 110048
6. Canbank Factors Limited,
No. 17, Seshadri Road, Bangalore- 560009
7. SBI Global Factors Limited
Metropolitan Building, 6th Floor, Bandra Kurla Complex,
Bandra(E), Mumbai- 400051

INTERBANK MARKET:

The Interbank Market is the market for currencies for Foreign Exchange - the
international market for currencies. The Interbank Market is the largest market in
the world dealing in about $1.9 trillion daily turnover (according to a survey back
in 2004).

The Interbank market allows traders to speculate on movements in the value of

currencies. For example of you felt that the Euro were to go up against the US
Dollar, you could turn to a market maker in the Forex market to take a position and
buy the EURUSD currency pair.

In more laymen terms , traders are able to BUY a currency pair or SELL a
currency pair. When you BUY the currency pair, you profit as the price goes up
and lose as the price goes down. When you SELL the currency pair, you profit as
the price goes down and lose as the price goes up. You can buy or sell any
currency at any time, and thus can profit (and lose) in any economic situation.

Market Structure - Unlike equities or futures markets, in FX there is no central

exchange where all trades are cleared. Instead the foreign exchange market is
network of thousands of banks interconnected electronically, making FX an Over
the Counter (OTC) market trading in practically every international financial
center.

Market Hours - Because the Forex Market is not restricted by exchange hours and
traded across the globe, the Foreign Exchange market is available for trading 24
hours a day. This makes it attractive to those traders seeking market liquidity that
traditional equity and futures markets lack.

Retail segment:

Retail Forex began around 1999-2000, when the internet access made online
investment tools available for individual investors to access the market. Auto
operation offered by many developers based on your need and temperament, it has
now truly become a boon for the retail traders.Traditional financial markets like
stocks and bullion markets were in forefront throughout the world until a few years
back but now Forex markets are looming large in the countries like United States,
Indonesia, South America, United Kingdom, and Germany, where it now holds
first place in terms of volume, ahead of traditional markets.
The growth and development in retail segment of the Forex is due to its flexibility
and for numerous possibilities being offered, unlike the traditional ones.

The following are the key reasons for exponential growth in the retail Forex.

• The traded product-Currency pairs are the same throughout the world, which
makes it much easier to invest in it than in traditional foreign markets, where the
lack of understanding about stocks and futures contracts available in each market
poses a lot of difficulty to the retail traders.

• Investors have not to worry about the commissions per trade as it is only the
spread allocated by the Broker which becomes a cost for an investor while entering
into the Forex transaction.

• A retail Investor can trade with very small amount of money due to higher
provision of leverage going up to 200:1, compared to 10:1 in the traditional market.
Thus investors can make a decent profit in terms of both percentage and absolute
figures with as little investment as $500-$1000.

• Investors need not worry about any liquidity crisis for total traded volume is far
higher compared to the small trades done by them. Thus, absolute liquidity and
instant execution are the hall marks of Forex trade, reducing slippage to the nil.

• You can trade and take position either way; going long if the market is in upward
trend or going short if you find market is in downward trend because you need not
own any securities in advance in Forex.

Thus, retail Forex offers a great promise and has truly become a bonhomie for the
retail traders opening up new vistas for them to earn their livelihood and to be
prosperous with their grit and determination.
(D) TRADING PLATFORM & SETTLEMENT:

(I) FX- CLEAR OF CCIL

CCIL has developed FX-CLEAR, a Forex Dealing System, which has been
launched on August 7, 2003. FX-CLEAR offers both Order Matching and
Negotiation Modes for dealing.

The FX-CLEAR covers the inter-bank US Dollar-Indian Rupee (USD- INR) Spot
and Swap transactions and transactions in major cross currencies (EUR/USD,
USD/JPY, GBP/USD etc.) The USD-INR constitutes about 85% of the
transactions of the total Forex transactions in India in terms of value.

Benefits

Reducing the cost of forex transactions in India by providing cost-efficient trading

terminals. CCIL will provide the FX-CLEAR to the members free of charge where
as similar available systems cost them Rs 50000/= to more than Rs 3 lakhs per
month per terminal depending on the services they choose to have. Offering
enhanced value added trading features to meet the real needs of market relating
to forex transactions. Some of the features like market by price (best 5), market by
order (best 5), market movements, orders with price, time and quantity conditions
etc. which are available in Order Matching Mode of FX-CLEAR are not available
in other existing Forex Dealing System in India. Enhancing the depth of the
market through wider participation of banks. Currently, many banks have not
availed the services of the existing Forex Dealing Systems because of the higher
cost. As mentioned above, CCIL will provide the FX-CLEAR to its members free
of cost, all banks in India will avail this service and thus CCIL would help in
enhancing the depth of the forex market in India through participation of more
banks. CCIL will provide STP (Straight Through processing) for all trades in
USD-INR done on FX-CLEAR . All deals concluded in USD-INR currency pair on
CCIL’s dealing platform will be taken up for settlement by CCIL’s forex clearing
and settlement system. This will include deals on both the Order Matching Mode
as well as the Negotiation mode. Reducing the counter-party and default risk by
ensuring suitable settlement mechanism. The predominant risk is settlement risk
which is the risk that settlement does not take place as expected. Settlement risk
comprises both credit and market risks. The risk management system of CCIL for
forex clearing and settlement system includes tools for managing credit risk by
way of membership norms and member-wise Net Debit Caps (NDC) besides a loss
allocation procedure and tools for managing market risks such through
collateralised lines of credit, operation of a settlement guarantee fund etc. By
using the CCIL’s FX-CLEAR, the Members will have the advantages of CCIL’s
institutional structure and standing, the Straight-Through Processing (STP) facility,
cost efficient Forex Dealing, automatic Price discovery in addition to other
qualitative benefits.

(II) FX DIRECT LAUNCHED BY I.B.S FOREX PVT. LTD.

IBS FOREX is promoted by Financial Technologies (India) Ltd. (FTIL). FTIL,
headquartered in India and listed on the Bombay Stock Exchange and the National
Stock Exchange, is India's leading Vertical Specialist enterprise delivering
mission-critical transaction automation technologies for Equities, Derivatives,
Forex and Commodity markets.

FTIL has also promoted India’s leading commodity futures exchange-the Multi
Commodity Exchange of India (MCX); the new global on-line commodities
derivatives exchange in Dubai- the Dubai Gold & Commodities Exchange
(DGCX); and India’s first Spot electronic exchange for commodities markets - the
National Spot Exchange Limited (NSEL) .

MANAGEMENT

Mr. P .G. Kakodkar - Chairman

(Ex-Chairman, State Bank of India)

Mr. Jignesh Shah - Vice Chairman

(Chairman and CEO, Financial Technologies India
Ltd)

Mr. V.Hariharan - Director

(CTO, Financial Technologies India Ltd)

Mr. Nihal Chauhan - Director

(Ex.Treasury Chief, Arab Monetary Fund)

PRODUCTS
‘FXDIRECT’ offers an on-line, real time, anonymous deal matching system for

both SPOT and FORWARD trading in USD/INR for the inter-bank forex market in
India. In addition it has a negotiated dealing system for one-to-one trades in any
currency pair.

IBS will also be offering a similar platform for trading in USD/INR Options and
other derivatives.
The complete technology is developed and maintained by the parent company-
FTIL, ensuring reliability, availability and scalability and is delivered to the users
through state-of-art communication network built to global standards within a
secure and encrypted environment with all in-built redundancies which ensure
minimum downtime.

CLIENTS

Bank of Baroda Bank of India

Bank of Maharashtra Central Bank of India
Canara Bank Corporation Bank
Punjab National Bank State Bank of India
State Bank of Indore State Bank of Hyderabad
State Bank of Patiala State Bank of Travancore
Syndicate Bank UCO Bank
Union Bank of India ICICI Bank
HDFC Bank Karnataka Bank
IDBI Bank Bank of Bahrain & Kuwait
UTI Bank
American Express Bank
BNP Paribas
TOPIC-II - INTERNATIONAL MONETARY
SYSTEM
INTRODUCTION:

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 between 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 actors spread over several decades. Alternatively,
they can arise from a single architectural vision as happened at Bretton Woods in
1944.Currency trading with floating exchange rates at the Foreign exchange market
is a key part of the post 1971 financial system.

The Gold Standards:

The first modern international monetary system was the gold standard. Operating
during the late 19th and early 20th cents. The gold standard provided for the free
circulation between nations of gold coins of standard specification. Under the
system, gold was the only standard of value.

The advantages of the system lay in its stabilizing influence. A nation that exported
more than it imported would receive gold in payment of the balance; such an influx
of gold raised prices, and thus lowered the value of the domestic currency. Higher
prices resulted in decreasing the demand for exports, an outflow of gold to pay for
the now relatively cheap imports, and a return to the original price level (see
balance of trade and balance of payments).
A major defect in such a system was its inherent lack of liquidity; the world's
supply of money would necessarily be limited by the world's supply of gold.
Moreover, any unusual increase in the supply of gold, such as the discovery of a
rich lode, would cause prices to rise abruptly. For these reasons and others, the
international gold standard broke down in 1914.

During the 1920s the gold standard was replaced by the gold bullion standard,
under which nations no longer minted gold coins but backed their currencies with
gold bullion and agreed to buy and sell the bullion at a fixed price. This system,
too, was abandoned in the 1930s.

The Gold-Exchange System:

In the decades following World War II, international trade was conducted
according to the gold-exchange standard. Under such a system, nations fix the
value of their currencies not with respect to gold, but to some foreign currency,
which is in turn fixed to and redeemable in gold. Most nations fixed their
currencies to the U.S. dollar and retained dollar reserves in the United States,
which was known as the “key currency” country. At the Bretton Woods
international conference in 1944, a system of fixed exchange rates was adopted,
and the International Monetary Fund (IMF) was created with the task of
maintaining stable exchange rates on a global level.
The Bretton Woods system:

The Bretton Woods system of monetary management established the rules for
commercial and financial relations among the world's major industrial states in the
mid 20th century. The Bretton Woods system was the first example of a fully
negotiated monetary order intended to govern monetary relations among
independent nation-states.

Preparing to rebuild the international economic system as World War II was still
raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington
Hotel in Bretton Woods, New Hampshire, United States, for the United Nations
Monetary and Financial Conference. The delegates deliberated upon and signed the
Bretton Woods Agreements during the first three weeks of July 1944.

Setting up a system of rules, institutions, and procedures to regulate the

international monetary system, the planners at Bretton Woods established the
International Monetary Fund (IMF) and the International Bank for Reconstruction
and Development (IBRD), which today is part of the World Bank Group. These
organizations became operational in 1945 after a sufficient number of countries
had ratified the agreement.

The chief features of the Bretton Woods system were an obligation for each
country to adopt a monetary policy that maintained the exchange rate of its
currency within a fixed value—plus or minus one percent—in terms of gold and
the ability of the IMF to bridge temporary imbalances of payments.

On August 15, 1971, the United States unilaterally terminated convertibility of the
dollar to gold. This action, referred to as the Nixon shock, created the situation in
which the United States dollar became the sole backing of currencies and a reserve
currency for the member states.

The post Bretton Woods system:

An alternative name for the post Bretton Woods system is the Washington
Consensus. While the name was coined in 1989, the associated economic system
came into effect years earlier: according to economic historian Lord Skidelsky the
Washington Consensus is generally seen as spanning 1980–2009 (the latter half of
the 1970s being a transitional period).[14] The transition away from Bretton Woods
was marked by a switch from a state led to a market led system.[4] The Bretton
Wood system is considered by economic historians to have broken down in the
1970s:[14] crucial events being Nixon suspending the dollar's convertibility into gold
in 1971, the United states abandonment of Capital Controls in 1974, and Great
Britain's ending of capital controls in 1979 which was swiftly copied by most other
major economies.

In some parts of the developing world, liberalization brought significant benefits

for large sections of the population – most prominently with Deng Xiaoping's
reforms in China since 1978 and the liberalization of India after her 1991 crisis.

Generally the industrial nations experienced much slower growth and higher
unemployment than in the previous era, and according to Professor Gordon
Fletcher in retrospect the 1950s and 60s when the Bretton Woods system was
[15]
operating came to be seen as a golden age. Financial crises have been more
intense and have increased in frequency by about 300% – with the damaging
effects prior to 2008 being chiefly felt in the emerging economies. On the positive
side, at least until 2008 investors have frequently achieved very high rates of
return, with salaries and bonuses in the financial sector reaching record levels.

The "Revived Bretton Woods system:

From 2003, economists such as Michael P. Dooley, Peter M. Garber, and David
Folkerts-Landau began writing papers[16] describing the emergence of a new
international system involving an interdependency between states with generally
high savings in Asia lending and exporting to western states with generally high
spending. Similar to the original Bretton Woods, this included Asian currencies
being pegged to the dollar, though this time by the unilateral intervention of Asian
governments in the currency market to stop their currencies appreciating. The
developing world as a whole stopped running current account deficits in 1999 [17] –
widely seen as a response to unsympathetic treatment following the 1997 Asian
Financial Crisis. The most striking example of east-west interdependency is the
relationship between China and America, which Niall Ferguson calls Chimerica.
From 2004, Dooley et al. began using the term Bretton Woods II to describe this de
facto state of affairs, and continue to do so as late as 2009.[18] Others have
described this supposed "Bretton Woods II", sometimes called "New Bretton
Woods",[19] as a "fiction", and called for the elimination of the structural
imbalances that underlie it, viz, the chronic US current account deficit.[20]

However since at least 2007 those authors have also used the term "Bretton Woods
II" to call for a new de jure system: for key international financial institutions like
the IMF and World Bank to be revamped to meet the demands of the current age,
[21]
and between 2008 to mid 2009 the terms Bretton Woods II and New Bretton
Woods was increasingly used in the latter sense. By late 2009, with less emphases
on structural reform to the international monetary system and more attention being
paid to issues such as re-balancing the world economy, Bretton Woods II is again
frequently used to refer to the practice some countries have of unilaterally pegging
their currencies to the dollar.