Choosing between different fixed exchange rate regimes
Fixed exchange rate regimes can be useful in generating anti-inflation credibility. The institutional features behind specific fixed exchange rate regimes are generally important for how much credibility can be gained. It is argued that unless it is possible to set up a fixed exchange rate regime with substantial capability of resisting 'speculative attacks' (e.g. through joining a currency union like the EMU), it may be a better option to choose a floating exchange rate regime.