ECO 3250 Chapter Notes - Chapter 15: Exchange Stabilization Fund, Floating Exchange Rate, Seigniorage
Document Summary
Floating exchange rates: floating (or flexible) exchange rate currency prices are established daily in foreign exchange market without restrictions imposed by govt. policy on the extent that prices can move. Managed floating rates: managed floating system exchange rates should be adjusted more promptly and in small but continuous amounts in response to evolving market forces, 1. Currency manipulation: purchase or sale of a currency on exchange market in order to influence the value of that currency, u. s. accused china for being a currency manipulator. 5: external factors (ex: an increase in interest rates in major international currencies can trigger a currency crisis if a central bank resists increasing the interest rate it charges. Capital controls: aka exchange controls government imposed barriers to foreign savers investing in domestic assets or to domestic savers investing in foreign assets. 2) if the u. s. financial system come under stress, the fed can use various monetary powers to aid and contain possible failures;
