Perspectives on global development

Development Centre Studies: Don't Fix, Don't Float


Don´t Fix, Don´t Float is a book about credibility, or lack thereof. It deals with questions pertaining to international financial architecture from the perspective of developing countries, emerging markets and transition economies.

  • Should the monetary authority fix the exchange rate of the national currency?
  • Should it instead let the currency float in foreign exchange markets?
  • What about bands, baskets and crawls between the fix and the float corners?

Answering these questions is of significance to the national economy involved and, with regard to global finance, often beyond. In the same way that there may never be a pure float, even among key currencies, an instant fix does not provide a fast lane to credibility. Credibility is earned abroad as the development process reinforces institution building in monetary, financial and budgetary matters. Indeed, rules for budgetary adjustment (such as the zero deficit in Argentina or the EU Stability and Growth Pact) are necessary for any exchange-rate regime to deliver economic growth and development. In Don´t Fix, Don´t Float, the case for intermediate regimes is made for five country groups in Africa, Asia and Latin America. Developing countries, emerging markets and transition economies, together with the OECD area, are facing the consequences of a worsening global economic outlook. In this environment, the development perspective underlying Don't Fix, Don't Float is clearly essential.

Table of Contents

  • Preface
  • Chapter 1 - Monetary Integration for Sustained Convergence: Earning Rather than Importing Credibility
    Jorge Braga de Macedo, Daniel Cohen and Helmut Reisen
  • Chapter 2 - Intermediate Exchange-Rate Regimes for Groups of Developing Countries
    William H. Branson
  • Chapter 3 - The Case for Hard Pegs in the Brave New World of Global Finance
    Guillermo A. Calvo
  • Chapter 4 - Exchange Rates in Transition
    Brigitte Granville

This publication can be purshased from OECD Online Bookshop

ISBN: 92-64-19533-5