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One world, one money? - Friedman - Mundell Debate

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Creation of the euro, among other developments, has increasingly focused attention on the question of fixed exchange rates versus flexible exchange rates. Even in Canada, seminars and conferences have been held exploring the subject. Would a global move toward fixed exchange rates, including currency blocs, be a good idea or not? Milton Friedman: Discussion of this issue requires replacing the dichotomy fixed or flexible by a trichotomy: 1. hard fixed (e.g., members of Euro, Panama, Argentine currency board); 2. pegged by a national central bank (e.g., Bretton Woods, China currently); 3. flexible (e.g., US, Canada, Britain, Japan, Euro currency union). By now, there is widespread agreement that a global move to pegged rate regimes would be a bad idea. Every currency crisis has been connected with pegged rates. That was true most recently for the Mexican and East Asian crisis, before that for the 1992 and 1993 common market crises. By contrast, no country with a flexible rate has ever e

One world, one money? Skip to content Policy Options Search Search fr Search Search fr One world, one money? Robert Mundell and Milton Friedman debate the virtues—or not—of fixed exchange rates, gold, and a world currency. May 1, 2001 by Milton Friedman Robert Mundell Share Linkedin Icon-bluesky-icon Envelope Print X-twitter Exchange rates: Fixed or flexible? Creation of the euro, among other developments, has increasingly focused attention on the question of fixed exchange rates versus flexible exchange rates. Even in Canada, seminars and conferences have been held exploring the subject. Woul

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