Public Information Notice: IMF Executive Board Discusses Fixed to Float: Operational Aspects Toward Exchange Rate Flexibility
December 30, 2004

From Fixed to Float: Operational Aspects of Moving Toward Exchange Rate Flexibility

Prepared by the Monetary and Financial Systems Department

Approved by Stefan Ingves

November 19, 2004

Use the free Adobe Acrobat Reader to view the pdf file (331kb)


Executive Summary and Issues for Discussion
I.   Introduction
II.   The Foreign Exchange Market
    Disorderly exits
III.   Official Intervention in the Foreign Exchange Market
    Disorderly markets
    Intervention principles/constraints
    Rules-based intervention
    Disorderly exits
IV.   Monetary Policy Framework and Nominal Anchor
V.   Prudential Regulation and Management of Exchange Rate Risk
    Disorderly exits
VI.   Pace and Sequencing of Exit to Exchange Rate Flexibility
    Gradualism: options
    Pace: key considerations
    Sequencing capital account liberalization and exchange rate flexibility
    In conclusion
1.   Number and Type of Exits, 1990-2002 
2.   Exits by Exchange Rate Regime, 1990-2002 
3.   Preparing for an Orderly Exit from a Peg 
1.   Orderly versus Disorderly Exits to Flexible Exchange Rate Regimes 
2.   Disorderly Exits and Foreign Exchange Market Development: Country Examples 
3.   Experiences with Crawling Bands 
4.   Sequencing the Reforms: Country Examples 
I.   Market Microstructure and other Foreign Exchange Market Issues 
II.   Country Experiences with Reversals Towards Less Flexible Exchange Rate Regimes 
III.   Issues Relating to Floating in Developing Countries