ويژگيهاي نظامهاي ارزي : رويكرد سنتي و جديد

Characteristics of Exchange Rate Systems: Traditional and New Approaches

The purpose of this paper is to analyze the characteristics of four exchange rate systems; fixed, floating, managed floating, and crawling with bands. The traditional approach focuses more on the anchor role of exchange rates, exchange rate risk and the independence of monetary policy. The new approach, however, focuses more on the issue of misalignment and vulnerability to crisis. The paper argues that the choice of an exchange rate system depends on the weights policy-makers attach to each of the advantages and disadvantages of the system in which the four systems vary greatly from each other. In addition, political considerations do matter in the choice of exchange rate system. Experiences of developing countries clearly show that the long-term consequences of an exchange rate system should not be forgotten for the sake of just the short-term benefits. It seems that this issue has, intentionally or unintentionally, been forgotten in the choice of exchange rate system in Iran during the last three decades.