The International Monetary System refers to the set of rules and institutions that govern how countries exchange currencies and conduct international trade. It includes various mechanisms for determining exchange rates, facilitating payments, and managing balance of payments. Key components of this system are the International Monetary Fund (IMF) and the World Bank, which help stabilize economies and provide financial assistance. This system has evolved over time, transitioning from the Gold Standard to the current system of floating exchange rates. Countries can now allow their currencies to fluctuate based on market forces, which helps to balance trade and investment flows globally.