Explain the features of the structure of the currency system resistant to economic threats

Author

Assistant Professor, Faculty of Islamic Studies and Economics, Imam Sadegh University

Abstract

The sharp decline in the value of the national currency in years 1 and 2 can be called one of the instances of currency crises. Although the crisis has been exacerbated by the inadequate economic structure of the country in the years leading up to the crisis, there is no doubt that Western threats and sanctions are the main cause of the crisis. Western sanctions aimed at balancing supply and demand in the foreign exchange market by reducing foreign exchange resources and limiting the movement of these resources, and this imbalance triggered the currency crisis. This article seeks to propose a structure for the country's currency system, using the experiences of the past currency crisis, to be more resilient to possible future threats. This structure includes suggestions on infrastructure factors, factors related to the stable supply of foreign exchange resources, demand management of foreign exchange resources and the development of the foreign exchange market.

Keywords

References

- Aghion, P., Bacchetta, P. and Banerjee, A. (2001), “Currency Crises and Monetary Policy in an Economy with Credit Constraints,” European Economic Review 45(7), 1121-1150.
- Burnside, C., Eichenbaum, M. and Rebelo, S. (2004), “Government Guarantees and Self-fulfilling Speculative Attacks,” Journal of Economic Theory 119, 31-63.
- Calvo, G. (1997), “Varieties of Capital-market Crises” in Calvo, G. & King, M. (eds.) The Debt Burden and Its Consequences for Monetary Policy, London: MacMillan Press.
- Desai, Padma, (1998),” Macroeconomic Fragility and Exchange Rate Vulnerability: A Cautionary Record of Transition Economies”, Journal of Comparative Economics, 26, 621-641.
- Fischer, Stanley (2001), Exchange Rate Regimes and Crisis Prevention in Emerging Market Economies, Prepared for Delivery at the 4th Annual Conference of the Brookings Wharton Papers on Financial Services, Washington DC.
- Frankel, J. and Rose, A. (1996), “Currency Crashes in Emerging Markets: An Empirical Treatment,” Journal of International Economics
-Glick, R. and Hutchison, M., (2011), “Currency Crises, Federal Reserve Bank of San Francisco”, Working Paper Series.
-Krugman, P. (1979), “A Model of Balance-of-payments Crises,” Journal of Money, Credit, and Banking 11, 311–25.
-McKinnon, R. and Pill, H. (1995), “Credible liberalizations and International Capital Flows: The ‘Overborrowing Syndrome’,” In Financial Deregulation and Integration in East Asia, Ito, T. & Krueger, A.O. (eds.), Chicago: University of Chicago Press.
-Milesi-Ferretti, G. M. and Razin, A. (1998), “Current Account Reversals and Currency Crisis: Empirical Regularities,” IMF Working Paper 98/1306620.
-Obstfeld, M. (1986), “Rational and Self-fulfilling Balance-of-payments Crises,” American Economic Review 76 (1), pp. 72-81. -Obstfeld, M. (1994), “The logic of Currency Crises,” Cahiers Economiques et Monétaires 43, 189–213.

Files

History

  • Receive Date: 05 October 2016
  • Revise Date: 11 September 2019
  • Accept Date: 19 September 2018
  • Publish Date: 20 February 2016

Share

How to cite

Statistics