What are the roles of the international monetary system and balance of payments accounting system in the promotion of international trade and FDI?
What will be an ideal response?
The international monetary system establishes the rules by which countries value and exchange their currencies. It also provides a mechanism for correcting imbalances between a country's international payments and its receipts. The international monetary system's accounting system records international transactions and supplies information about the health of national economies. The balance of payments (BOP) accounting system records international transactions and supplies vital information about the health of a national economy and likely changes in its fiscal and monetary policies. BOP statistics can be used to detect signs of trouble that could eventually lead to governmental trade restrictions, higher interest rates, accelerated inflation, reduced aggregate demand, and general changes in the cost of doing business in any given country.
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