a fixed rate will be desirable if one believes that it is possible to adjudge what the appropriate equilibrium is and wants to hold the rate therethe fixed rate imposes a constraint on domestic monetary policy: if its stance is significantly out of the line with that of the country is fixed, unwelcome inflows may exacerbate inflation; outflows may drain the country's foreign exchange reserves. this constraint on monetary policy is often ragarded as a useful discipline against adopting policies which deverge significantly from the anchor country
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