Exchange Rate Systems

Term Paper # 95494

An examination of the pros and cons of the fixed versus floating exchange rate systems, particularly focusing on the situation in China today.

2,188 words () | 7 sources | MLA | 2005 United States

Paper Summary:

This paper discusses the two types of exchange rate systems used in the world today - the fixed rate system and the flexible rate system. It discusses the differences between the two systems and their advantages and disadvantages. The paper then looks at the current problems in China using a fixed (pegged) exchange rate system. The paper ends with the writer's opinion on the subject.

Table of Contents:
Advantages of a Fixed Exchange Rate
Advantage of a Floating Exchange Rate
Current Problem with China
My Opinion

From the Paper:

"The foreign exchange market is the largest market in the world, it is the market "in which individuals, firms, and banks buy and sell for any currency" (Salvatore). Since each country has its own currency, an exchange rate system is needed. An exchange rate is the rate at which one currency can be exchanged for another. The two types of exchange rate systems used in the world are the fixed rate system and the flexible rate system. Both systems have their pros and cons, and both are used in the world today."

Sample of Sources Used:

Salvatore, Dominick. "International Economics" Eighth Edition Hermitage
Caramazza, Francesco and Aziz, Jahangir. "Fixed or Flexible? Getting the Exchange Rate Right in the 1990's" 1998 International Monetary Fund -
Heakal, Reem. "Floating and Fixed Exchange Rates" Investopedia.com -.
Burfisher Jim and Lawton, Ryan. "The Pros and Cons of Regimes" 11/13/03 www.colorado.edu/Economics/courses/boileau/4999/rates.pdf
Kenen, Peter B. "Fixed Versus Floating Exchange Rates" Cato Journal, Vol. 20 No.1 (Spring/Summer 2000)