International Reserve System: Is it Feasible? Essay -- Economics Econo

International harbor System Is it feasible? During the last decade, the world saw some of the most severe stinting shocks and crises since The Great Depression of the late 1920s. The crises of Mexico in 1994, Russia in 1995, Asian countries in 1997 and even recently in Latin America in 2000 befuddle shown us that the economic shocks have a very drastic and stultify effect on the stricken countries. Rapid capital outflow firms and banks kindle by bad debts inability to provide loans bank closures due to choppy capital losses and devaluation of the home currency, all have struck the moved(p) countries simultaneously that their central banks did not have enough sufficient militia to protect themselves. The realization of the poor central banks regulation, in like manner aided by the fact that markets throughout the world are today interlinked, quickly caused panic and similar shocks to spread to neighboring countries and even regions. An worldwide organization, which cont rols a form of support system, could have been the lender of last lapse for these sickened countries in their time of need. A working example of a reserve structure for banks would be the plyeral Reserve System currently creation used by the United States. This consists of 12 regional Federal Reserve Banks that is coordinated under one main Board of Governors. The main roles of the Fed is to issue new currency, administer discount loans to banks, examine the management of local banks and their financial status and provide a system of standardized banking regulations for banks to follow. Lastly, exclusively most importantly, the Fed acts as a lender of last dawdle to banks facing financial collapse.1 This not only provides stability for consumers but in addition prot... ...y (Cambridge Harvard University Press, 1994).5) Federal Reserves Bank, Boston web site, http//www.bos.frb.org6) Frederic S.Mishkin, The economics of Money, Banking and Financial Markets (New York public Student Series, 2003)7) Jorge A. Chan Lau / Zhaohui Chen, Financial Crisis and Credit Crunch as a firmness of purpose of Inefficient Financial Intermediation., IMF Working Paper, August 1998 http//www.imf.org/external/pubs/ft/wp/wp98127.pdf or http//www.imf.org/external/pubs/CAT/longres.cfm?sk=2738.08) IMF web site, http//www.imf.org9) The Asian Crises, http//faculty.washington.edu/karyiu/Asia/papers/index.htm10) Works in International Monetary Fund-Financial Medic to the World?, ed. Lawrence J. McQuillan and Peter C. Montgomery (Stanford make clean University Press, 1999)11) World Bank web site, http//www.worldbank.org