Short answers, pulled from the story.
International finance is the branch of monetary and macroeconomic study concerned with financial relationships between two or more countries. It examines exchange rates, balance of payments, foreign direct investment, and the global financial system. International trade relies primarily on microeconomic concepts, while international finance investigates predominantly macroeconomic ones.
The idea of fiat currency emerged in China just over a thousand years ago, across the Tang, Song, Yuan, and Ming dynasties. During the Tang dynasty (618-907), a shortage of precious metals pushed people toward paper drafts. The Song dynasty (960-1276) produced what is considered the first legal tender, when traders in Sichuan issued private notes backed by monetary reserves.
Delegates from 44 nations met in Bretton Woods, New Hampshire, after World War Two to establish rules for international trade and monetary policy. The conference produced the frameworks for the International Monetary Fund and the World Bank. It also created a system of exchange rates in which currencies were pegged to the US dollar, which was itself convertible to gold.
Nixon removed the convertibility of the US dollar to gold in 1971 after France and other nations reclaimed gold they had stored in the US, draining American reserves. France had grown skeptical of the dollar's role as the world's reserve currency. The wave of nations exchanging dollars for gold made the peg unsustainable, and Nixon's decision formalized what had become inevitable.
International finance identifies three forms of foreign exchange risk: transaction exposure, which arises when deals are struck in foreign currencies before payment; economic exposure, which describes how exchange rate shifts affect long-term competitiveness; and translation exposure, which occurs when foreign subsidiaries' statements are converted into a home currency. Political risk, including changes in tax policy or capital controls, is a separate but related concern.
Core models include the Mundell-Fleming model, which links monetary policy, fiscal policy, and exchange rates in open economies, and optimum currency area theory, which identifies which regions benefit from sharing a currency. Purchasing power parity, interest rate parity, and the international Fisher effect are also foundational concepts used to assess currency valuation and cross-border investment decisions.