# International monetary system

In Maredoratica, the international monetary system consists of several major parts: (1) the movement of capital and the various rules and regulations associated with it, (2) domestic fiscal and monetary policy, and (3) the movement of exchange rates and of foreign reserves. Most governments allow the free movement of capital into and out of their countries, and allow the value of their currency to be determined by supply and demand. Additionally, more than 60% of the region belongs to the Maredoratic League, the laws of which require member-states to maintain open capital markets. Numerous academics, as well as the Maredoratic Trade Organization, have deemed Maredoratica a "free capital area," indicating loose regulations on capital movement and strong investment growth.

The monetary system of Maredoratica was based around a gold standard for many centuries, until it was abolished in 1930.

## Structure

### Reserve currencies

Central and private banks hold some foreign currencies in reserve as assets. They are used to pay off debt, manage monetary policy, stabilize the domestic currency, and conduct international trade. Maredoratica does not have a dominant reserve currency, meaning that a variety of currencies are held and used for international trade. Commodities tend to be priced in the currency (or currencies) of their major producers.

Maredoratica's main reserve currencies (by percentage of total world reserves) are the Morivaine ecu (35%) and the Van Luxemburger florin (26%). Secondary currencies include the Pollonan koruna (16%) and Jungastian cruzeiro (10%).

## Balance of payments

A map of current account balances in Maredoratica (>$100 bn surplus in dark green, followed by$99-$40 surplus in light green, etc.) Most Maredoratic countries run mild current account surpluses or deficits, indicating that they consume and spend approximately as much as they produce. Four major countries (Morieux, Van Luxemburg, Questers, and Prekonate) run current account surpluses or deficits of plus/minus$100 billion. As a protective measure against sudden, dramatic reverses in their current account balances, all five maintain allow their currencies to freely depreciate. The most recent addition to this group is Questers, which stopped manipulating its currency after the 2014 Questarian currency crisis.

Areas of Wilassia and Alqosia have seen capital flight toward Alisna since the passage of the GTFP in 2015, as developing countries unable to meet the GTFP's trade standards become less appealing to investors. Prekonate's Ministry of Industry and Trade released a report in Q1 2016 claiming that GFTP will cut gross domestic product in Wilassia and Alqosia by 10% by 2020.