Evolution of the international exchange rate system and balance of payments equilibrium

Evolución del sistema cambiario internacional y el equilibrio en la balanza de pagos.

This article analyzes the evolution of the international exchange rate system and its relationship with the criteria used to determine balance of payments equilibrium. It begins by highlighting the importance of the exchange rate as a mechanism that transfers purchasing power between currencies and facilitates international economic transactions. The text historically reviews the main exchange rate systems, from the gold standard and the Bretton Woods system to contemporary schemes of managed exchange rate flexibility under the supervision of the International Monetary Fund. It also examines how changes in the world economy have transformed the criteria for analyzing the balance of payments: first, the current account criterion, dominant between the 1940s and the 1970s; then, the basic balance criterion, relevant between the 1970s and the 1980s; and finally, the autonomous transactions criterion, associated with increasing international capital mobility, financial liberalization, and exchange rate volatility. The article concludes that there is a historical relationship between exchange rate systems and the way countries’ external equilibrium is interpreted. In the current context, international financial flows have gained increasing relevance compared to real transactions; therefore, the autonomous transactions approach provides a better framework for understanding changes in net external wealth and balance of payments imbalances.