Abstract:
Exchange rate regime choice is one of the most major subjects in international economic relations. Since the collapse of the Bretton Woods system in the early 1970s, countries have presented a large variety of exchange rate regimes giving a heterogeneous international monetary system. Some countries choose to let their exchange rate float according to free market mechanisms, while others decide to more or less stabilize the value of their currency vis-à-vis a currency or a basket of currencies. It is commonly argued that these choices are motivated by different objectives such as low inflation, reduced volatility of exchange rate or competitiveness control. The waves of currency crises that affected developing countries in the 1990’s revived interest in exchange rate regime choice.
