Moving to a Flexible Exchange Rate: How, When, and how Fast?
International Monetary Fund, 2005 - Business & Economics - 21 pages
A growing number of countries are adopting flexible exchange rate regimes because flexibility offers more protection against external shocks and greater monetary independence. Other countries have made the transition under disorderly conditions, with the sharp depreciation of their currency during a crisis. Regardless of the reason for adopting a flexible exchange rate, a successful transition depends on the effective management of a number of institutional and operational issues. The authors of this Economic Issue describe the necessary ingredients for moving to a flexible regime, as well as the optimal pace and sequencing under different conditions.
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Moving to a Flexible Exchange Rate How When and How Fast?
Developing the foreign exchange market
Central bank intervention
Adopting an alternative nominal anchor
Managing and supervising exchange rate risk
Pace and sequencing
To float or not to float
The Economic Issues Series
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adopt inflation targeting alternative nominal anchor amount of intervention balance of payments Barry Eichengreen basket of currencies borrowers capital account Cem Karacadag central bank intervention central rate controls crawling bands crawling peg credibility developing countries disorderly exits disorderly markets example exchange rate band exchange rate flexibility exchange rate level exchange rate movements exchange rate regime exchange rate risk exchange rate volatility exit from pegs exits to flexible Fiscal fixed exchange rate fixed peg fixed rate flexible exchange rate flexible regimes floating exchange rate foreign cur foreign currency funds foreign exchange market foreign exchange operations foreign exchange risk Gilda Fernandez greater exchange rate increase interest rate INTERNATIONAL MONETARY FUND intervention policies limits liquidity macroeconomic margins market participants market transparency ments misalignments monetary authority monetary policy independence monetary targeting monitoring move Open Market Operations Orderly exits pegged exchange rate policymakers price discovery rency reserves Rupa Duttagupta transition Types of exchange