Fixed Exchange Rates
Beginning of paper
In a regime of , how might a Central Bank operate its
monetary policy and its policy for intervention in foreign exchange
markets? Why does it need foreign exchange reserves?
The last 20 years have seen an increased international interdependence due
to the reduction in the controls on capital flo ....
Middle of paper
.... fixed, flexible and managed exchange rate.
In a fixed exchange rate regime, national governments agree to maintain
the convertibility of their currency at a fixed exchange rate. A currency
is convertible if the government acting through the central bank, agrees
to buy or sell as much of the currency people wish to trade at the fixed
exchange rate. Most central banks act as the government's banker, the
Banks' bank, lender of last resort and issuer of notes as well as
supervising the ....
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Word count: 1526
Page count: 6 (approximately 250 words per page)
