Exchange Rate Choices

... were allowed to float against other currencies, meaning that the currency was not formally pegged to some other currency or basket of currencies. This was up from 38 ten years earlier, suggesting a significant move toward greater flexibility of exchange rates. Yet during the 1990s half a dozen countries installed currency boards, a particular strong form of exchange rate fixity; ten European currencies were eliminated in favor of a common currency, the euro; other countries were actively considering installing currency boards, or even adopting the US dollar for domestic use. After a quarter century of floating among the major currencies, exchange rate policy is still source of vexation, and the appropriate choice is by no means clear. Should a country allow its currency to float, subject perhaps to exchange market intervention from time to time? Or should it fix its currency to