SOC236H5 Lecture Notes - Lecture 10: Arbitrage, Pound Sterling, Currency Intervention
20 Mar 2018
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Document Summary
Talked a bit about the finance plays in creating both unprecedented wealth, but also unprecedented. How the current monetary system came to be. 1913-1945: the collapse of the gold standard and imposition of capital controls. Since the invention of currency, coins have been minted from precious metal. Gold, silver, and copper was minted into coins and used directly in economic transactions. But this was onerous and involved carting around large amounts of metal to make large transactions. With the invention of paper money, notes were exchangeable for a certain amount of metal held in central reserve banks. Because of the british industrial revolution, britain at the time was the world"s leading economic power and main source of foreign finance so other countries soon followed. As a result, in the 1880s, there was a global period. Changes in prices were a result of changes in amount of gold circulating. If less gold coin was circulating internally prices fell.
