the international Financial System The tremendous increase in capital flows among countries has heightened the international financial system’s impact on domestic economies. Issues we will explore in Chapter 18 include:   How does a country’s decision to fix its exchange rate to that of another nation shape the conduct of monetary policy?   What is the impact of capital controls that restrict mobility of capital across national borders on domestic financial systems and the performance of the economy?   What role should international financial institutions, such as the International Monetary Fund, play in the international financial system?