Moving to greater exchange rate flexibility : operational aspects based on lessons from detailed country experiences /
Ötker, İnci.
Vávra, David,1972-
International Monetary Fund.
Washington, DC : International Monetary Fund,
2007.
"Many countries moved toward more flexible exchange rate regimes over the past decade, which reflects in part the belief that more flexible exchange rates provide a greater degree of monetary policy autonomy and flexibility in responding to external shocks, including large and volatile capital flows. There has often been a reluctance to let go of pegged exchange rates despite the benefits of flexible rates. The extensive institutional and operational requirements needed to support a floating exchange rate as well as difficulties in assessing the right time and manner to exit tend to be additional factors in this reluctance. This paper presents the concrete steps taken by certain countries in transitioning to greater exchange rate flexibility, with a view to elaborating on the operational ingredients that proved helpful in promoting successful and durable transitions. It attempts to provide a better understanding of how these various operational ingredients were established and coordinated with the exits, how their implementation interacted with macro and other conditions, and how they contributed to the smoothness of the exits. The material in this paper was originally prepared in connection with a workshop on moving to greater exchange rate flexibility conducted in Ukraine in April 2005. The detailed case studies prepared subsequently also aimed a providing a follow-up to a discussion by the International Monetary Fund's (IMF) Executive Board in Devember 2004 on "From Fixed to Float: Operational Asoects of Moving Toward Exchange Rate Flexibility" (IMF, 2004). In concluding the discussion, Directors asked for more guidance on the sequencing and order of importance of the operational elements, backed by analysis of more specific country experiences and cross-country studies" -- pref. (v.)
Detailed country case studies were prepared by a team of experts consisting of Luis Ahumada, Fernando Barran, Andre Minella, Zbigniew Polanski, Piotr Szpunar, Barry Topf, and David Vavra.
Includes bibliographical references.
"Many countries moved toward more flexible exchange rate regimes over the past decade, which reflects in part the belief that more flexible exchange rates provide a greater degree of monetary policy autonomy and flexibility in responding to external shocks, including large and volatile capital flows. There has often been a reluctance to let go of pegged exchange rates despite the benefits of flexible rates. The extensive institutional and operational requirements needed to support a floating exchange rate as well as difficulties in assessing the right time and manner to exit tend to be additional factors in this reluctance. This paper presents the concrete steps taken by certain countries in transitioning to greater exchange rate flexibility, with a view to elaborating on the operational ingredients that proved helpful in promoting successful and durable transitions. It attempts to provide a better understanding of how these various operational ingredients were established and coordinated with the exits, how their implementation interacted with macro and other conditions, and how they contributed to the smoothness of the exits. The material in this paper was originally prepared in connection with a workshop on moving to greater exchange rate flexibility conducted in Ukraine in April 2005. The detailed case studies prepared subsequently also aimed a providing a follow-up to a discussion by the International Monetary Fund's (IMF) Executive Board in Devember 2004 on "From Fixed to Float: Operational Asoects of Moving Toward Exchange Rate Flexibility" (IMF, 2004). In concluding the discussion, Directors asked for more guidance on the sequencing and order of importance of the operational elements, backed by analysis of more specific country experiences and cross-country studies" -- pref. (v.)
Foreign exchange administration
Foreign exchange rates
Monetary policy