Global Financing and Exchange Rate Mechanisms Paper
Global Financing and Exchange Rate Mechanisms Paper
Global finance operations include financial procedures, such as accounting, financial planning and analysis, strategic planning, treasury, investor relations, and financial compliance. Exchange rate is the existing market cost for which one currency can be exchanged for another (Moffatt, n.d.). For instance, when the U.S. exchange rate for the Japanese Yen is ¥1.10, this means that 1 American Dollar can be exchanged for 1.1 Japanese Yen. The purpose of this paper is to analyze the exchange rate mechanism (Euro Currency Markets), to describe how this mechanism is used in global financing operations, and to analyze its importance in managing risks. The Euro Currency Markets, specifically most of the countries in the European Union (EU), have adopted the euro, a new currency that was introduced in Europe on January 1, 1999, and introduced as physical coins and banknotes in 2002. The name, Eurozone, has been coined as those countries who have adopted the euro. The ECB, which is located in Frankfort, Germany, is the responsible financial institution to institute the monetary policy within the Eurozone. The European System of Central Banks (ESCB), which is comprised of the central banks of the member countries, is involved in the printing, minting, and distribution of the coins and banknotes to all participants and in the management the Eurozone payment system operations. The evolution of the euro began in 1946 when Winston Churchill, then England's Prime Minister, and several other European leaders foresaw a United States of Europe. This eventually resulted in the formation of the 15-nation EU, which launched the euro. Belgium, Holland, Luxembourg, France, and Italy signed the Treaty of Rome in 1957 and formed the European Economic Community. Twenty-two years later (1979) the first single monetary system, the European Currency Unit (ECU), was created. In 1991, the European Monetary Unit (EMU) was formed by
Global finance operations include financial procedures, such as accounting, financial planning and analysis, strategic planning, treasury, investor relations, and financial compliance. Exchange rate is the existing market cost for which one currency can be exchanged for another (Moffatt, n.d.). For instance, when the U.S. exchange rate for the Japanese Yen is ¥1.10, this means that 1 American Dollar can be exchanged for 1.1 Japanese Yen. The purpose of this paper is to analyze the exchange rate mechanism (Euro Currency Markets), to describe how this mechanism is used in global financing operations, and to analyze its importance in managing risks. The Euro Currency Markets, specifically most of the countries in the European Union (EU), have adopted the euro, a new currency that was introduced in Europe on January 1, 1999, and introduced as physical coins and banknotes in 2002. The name, Eurozone, has been coined as those countries who have adopted the euro. The ECB, which is located in Frankfort, Germany, is the responsible financial institution to institute the monetary policy within the Eurozone. The European System of Central Banks (ESCB), which is comprised of the central banks of the member countries, is involved in the printing, minting, and distribution of the coins and banknotes to all participants and in the management the Eurozone payment system operations. The evolution of the euro began in 1946 when Winston Churchill, then England's Prime Minister, and several other European leaders foresaw a United States of Europe. This eventually resulted in the formation of the 15-nation EU, which launched the euro. Belgium, Holland, Luxembourg, France, and Italy signed the Treaty of Rome in 1957 and formed the European Economic Community. Twenty-two years later (1979) the first single monetary system, the European Currency Unit (ECU), was created. In 1991, the European Monetary Unit (EMU) was formed by
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