1. How do developing countries typically manage to keep currencies pegged at values that are too high? Who benefits from such an overvalued currency? Who is hurt by an overvalued currency?
2. What are the potential benefits of a pegged currency system?
3. Describe two different currency systems that have been introduced in countries such as Hong Kong and Ecuador to improve the credibility of pegged exchange rate systems.
4. What is the difference between a target zone and a crawling peg?
5. How can central banks defend their currency-for example, if the currency is within a target zone or pegged at a particular value?
6. What was the EMS?
7. What is a basket currency?
8. What did the Maastricht Treaty try to accomplish?
9. What is an optimum currency area?
10. Do you believe its monetary union will be benefi- cial for Europe?
11. Do you think the euro will survive?