Number: RL31204
Title: Fixed Exchange Rates, Floating Exchange Rates:What Have We Learned?
Authors: Marc Labonte, Government and Finance Division 
Abstract: This report evaluates the benefits and drawbacks of different types of exchange rate regimes from the perspective of their effects on macroeconomic stability. It focuses on three major types of exchange rate regimes: a floating exchange rate, a fixed exchange rate, and "hard pegs," such as a currency board or a currency union. While there are permutations on these regimes too numerous to mention, a thorough understanding of these three will allow the reader to understand any permutation equally well. In the case of exchange rate regimes "one size does not fit all" - different countries have very different political and economic conditions that make some regimes more suitable than others.
Pages: 22
Date: June 6, 2007