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De Facto Classification of Exchange Rate Regimes and Monetary Policy Frameworks

Data as of April 31, 2008

The classification system is based on the members' actual, de facto arrangements as identified by IMF staff, which may differ from their officially announced arrangements. The scheme ranks exchange rate arrangements on the basis of their degree of flexibility and the existence of formal or informal commitments to exchange rate paths. It distinguishes among different forms of exchange rate arrangements, in addition to arrangements with no separate legal tender, to help assess the implications of the choice of exchange rate arrangement for the degree of independence of monetary policy. The system presents members' exchange rate regimes against alternative monetary policy frameworks in order to highlight the role of the exchange rate in braod economic policy and to illustrate that different exchange rate arrangements can be consistent with similar monetary frameworks. The following explains the categoreis.

Exchange rate anchor

The monetary authority stands ready to buy or sell foreign exchange at given quoted rates to maintain the exchange rate at its predetermined level or within a range (the exchange rate serves as the nominal anchor or intermediate target of monetary policy). These regimes cover exchange rate regimes with no separate legal tender, currency board arrangements, fixed pegs with or without bands, and crawling pegs with or without bands.

Monetary aggregate target

The monetary authority uses its instruments to achieve a target growth rate for a monetary aggregate, such as reserve money, M1, or M2, and the targeted aggregate becomes the nominal anchor or intermediate target of monetary policy.

Inflation targeting framework

This involves the public announcement of medium-term numerical targets for inflation, with an institutional commitment by the monetary authority to achieve these targets. Additional key features include increased communication with the public and the markets about the plans and objectives of monetary policymakers and increased accountability of the central bank for its inflation objectives. Monetary policy decisions are guided by the deviation of forecasts of future inflation from the announced inflation target, with the inflation forecast acting (implicitly or explicitly) as the intermediate target of monetary policy.

Other

The country has no explicitly stated nominal anchor, but rather monitors various indicators in conducting monetary policy. This is also used when no relevant information on the country is available.

Related Links

Classification of Exchange Rate Arrangements and Monetary Policy Frameworks Home Page

Exchange rate arrangement (Number of countries) Monetary Policy Framework
Exchange rate anchor Monetary aggregate target Inflation targeting framework Other1
U.S. dollar (66) Euro (27) Composite (15) Other(7) (22) (44) (11)
Exchange arrangement with no separate legal tender (10) Ecuador
El Salvador
Marshall Islands
Micronesia, Fed. States of
Palau
Panama
Timor-Leste
Montenegro
San Marino
  Kiribati
       
Currency board arrangement (13) Antigua and Barbuda2
Djibouti
Dominica2
Grenada2
Hong Kong SAR
St. Kitts and Nevis2
St. Lucia2
St. Vincent and the Grenadines2
Bosnia and Herzegovina
Bulgaria
Estonia3
Lithuania3
  Brunei Darussalam
       
Other conventional fixed peg arrangement (68) Angola
Argentina
Aruba
Bahamas, The
Bahrain
Bangladesh
Barbados
Belarus
Belize
Eritrea
Guyana
Honduras
Jordan
Kazakhstan
Lebanon
Malawi
Maldives
Mongolia
Netherlands Antilles
Oman
Qatar
Rwanda
Saudi Arabia
Seychelles
Sierra Leone
Solomon Islands
Sri Lanka
Suriname
Tajikistan
Trinidad and Tobago
Turkmenistan
United Arab Emirates
Venezuela, Rep. Bolivariana de
Vietnam
Yemen, Rep. of
Zimbabwe
Benin4
Burkina Faso4
Cameroon5
Cape Verde
Central African Rep. 5
Chad5
Comoros
Congo, Rep. of5
Côte d'Ivoire4
Croatia
Denmark3
Equatorial Guinea 5
Gabon 5
Guinea-Bissau4
Latvia3
Macedonia, FYR
Mali4
Niger4
Senegal4
Togo4
Fiji
Kuwait
Libya
Morocco
Russian Federation
Samoa
Tunisia
Bhutan
Lesotho
Namibia
Nepal
Swaziland
Argentina
Malawi
Rwanda
Sierra Leone
     
Pegged exchange rate within horizontal bands (3)     Slovak Rep.3
Syria.
Tonga
         
Crawling peg (8) Bolivia
China
Ethiopia
Iraq
Nicaragua
Uzbekistan
    Botswana
Iran, I.R. of.
         
Crawling band (2) Costa Rica
    Azerbaijan
         
Managed floating with no pre-determined path for the exchange rate (44) Cambodia
Kyrgyz Rep.
Lao P.D.R.
Liberia
Mauritania
Mauritius
Myanmar
Ukraine
    Algeria
Singapore
Vanuatu
  Afghanistan, I.R. of
Burundi
Gambia, The
Georgia
Guinea
Haiti
Jamaica
Kenya
Madagascar
Moldova
Mozambique
Nigeria
Papua New Guinea
São Tomé and Príncipe
Sudan
Tanzania
Uganda
Armenia6
Colombia
Ghana
Guatemala
Indonesia
Peru
Romania
Serbia6
Thailand
Uruguay
  Dominican Rep.
Egypt
India
Malaysia
Pakistan
Paraguay
Independently floating (40)           Zambia
Albania
Australia
Austria7
Belgium7
Brazil
Canada
Chile
Cyprus7
Czech Rep.
Finland7
France7
Germany7
Greece7
Hungary
Iceland
Ireland7
Israel
Italy7
Korea, Rep. of
Luxembourg7
Malta7
Mexico
Netherlands7
New Zealand
Norway
Philippines
Poland
Portugal7
Slovenia7
South Africa
Spain7
Sweden
Turkey
United Kingdom
Congo, Dem. Rep. of
Japan
Somalia8
Switzerland
United States

1/ Includes countries that have no explicitly stated nominal anchor, but rather monitor various indicators in conducting monetary policy.

2/ The member participates in the Eastern Caribbean Currency Union.

3/ The member participates in the ERM II.

4/ The member participates in the West African Economic and Monetary Union.

5/ The member participates in the Central African Economic and Monetary Community.

6/ The central bank has taken preliminary step toward inflation targeting and is preparing for the transition to full-fledged inflation targeting.

7/ The member participates in the European Economic and Monetary Union.

8/ As of end-December 1989.