Floating vs. Fixed Exchange Rates - Do you think the world will move toward an international monetary system or fixed exchange rates in the future?
In the past, the value of currency was determined on the basis of the value of gold. Over a period of time, the temptation to return to a gold standard has been raised and debated. A fixed rate of exchange has the risks associated with the exchange rates and fiscal policies. In contrast, floating rates introduce new opportunities to countries.
Tasks:
Both floating and fixed exchange rate systems have benefits. Summarize briefly the advantages and disadvantages of each system.
Do you think the world will move toward an international monetary system or fixed exchange rates in the future? Provide reasons to support your answer.