Central Bank News has compiled the below table which summarizes countries' currencies, ISO codes, and currency regime. Similarly, if a surplus is followed by an equivalent deficit, rather than incurring debt to foreigners, the deficit instead will represent foreign repayment of the previous year’s credits.All of this background is necessary to describe a country’s Note how this accounting is similar to that for the national debt. The term for the measure of the total value of foreign assets held by domestic residents minus the total value of domestic assets held by foreigners. Governments that decide to peg their currency have to decide whether they want to allow foreign portfolio investment in and out of the country.If governments allow foreign portfolio investment, this approach attracts foreign investors into the country and opens new sources of financing for the country.
The name for the exchange rate regime in which the exchange rate value is determined by supply and demand for currencies in the private marketplace.
The most important international macroeconomic variables, then, are the trade balance, which measures the difference between the total value of exports and the total value of imports, and the exchange rate, which measures the number of units of one currency that exchanges for one unit of another currency.Because countries use different national currencies, international trade and investment requires an exchange of currency. However, repayment of international debt always represents a transfer of wealth from domestic to foreign citizens.The fact that debts are sometimes defaulted on, meaning the borrower decides to walk away rather than repay, poses problems for large creditor nations. Governments must decide not only how to issue its currency but how international transactions will be conducted. Likewise, if trade surpluses are run continually, then credits build up. When all countries circulate the same currency, it is the ultimate in fixity, meaning they have fixed exchange rates among themselves because there is no need to exchange. As any other decision, the decision to peg implies tradeoffs. In contrast, the Euro area, South Africa, and to a lesser degree Brazil and India are following the same path as the United States—running trade deficits that will add to their international debt.The United States, as the largest national economy in the world, is a good reference point for comparing international macroeconomic data.Several other noteworthy statistics are presented in this section:An exchange rate system in which the rate is fixed at a specified value by the government.An exchange rate system in which the rate fluctuates, or floats, because it is determined by supply and demand in the private market.Occurs when the value of exports exceeds the value of imports during a year.Occurs when the value of imports exceeds the value of exports during a year.A measure of the difference between the total value of domestic holdings of foreign assets and the value of foreign assets held in the domestic country.