Following the Asian financial crises and its global repercussions, which included the collapse of fixed exchange rates in Russia and Brazil, debate has raged about how to secure macroeconomic stability. The alternatives have seemingly boiled down to a choice between systems in which the exchange rate is rigorously fixed and serves as an anchor and those where the exchange rate is allowed to float freely with the central bank targeting a low level of inflation and then doing all it can to hit that target.
Following the Asian financial crises and its global repercussions, which included the collapse of fixed exchange rates in Russia and Brazil, debate has raged about how to secure macroeconomic stability. The alternatives have seemingly boiled down to a choice between systems in which the exchange rate is rigorously fixed and serves as an anchor and those where the exchange rate is allowed to float freely with the central bank targeting a low level of inflation and then doing all it can to hit that target.