Assess the pros and cons of different exchange rate systems
Assess the pros and cons of different exchange rate systems
Paper instructions:
- With reference to real world examples assess the pros and cons of different exchange rate systems. In your answer you should refer to:
– Floating exchange rate regimes – you should in particular consider whether floating currencies are conducive to promoting international trade.
– Pegged exchange rate regimes and pegged with bands exchange rate regimes – you should consider the possibility of currency crises in relation to the pegged with bands currency regimes and should consider an actual currency crisis such as the 1992 Black Wednesday Crisis for the pound and its membership of the ERM.
– Single currencies – in relation to single currencies you should consider the pros and cons of the Euro, you should bring in the Optimal Currency Area argument, and you should in particular consider whether a nation like Greece in the aftermath of the 2008 Financial Crisis suffered more than it would have if it had not been a part of the Eurozone (due to its inability to devalue its currency or implement a looser monetary policy) and you should also consider whether the ECB has responded adequately to the economic challenges of the current coronavirus crisis (i.e. should the ECB be implementing a looser monetary policy in particular right now). You should consider whether a one size monetary policy does fit all.
Formalities:
- The minimum amount of words to be used is 2000 and the maximum is 2500
- You may want to include images/graphics etc. (for example from their website) to make your reasoning and argumentation more visual and explicative
- Font: Arial. Size: 12,5pts. Line spacing: 1,5. Text align: Justified.
- Appendices and References, do not count towards the final word count but are strongly recommended (referencing websites, articles, books etc.)
- In text references and a bibliography are expected and must follow the Harvard citation style.
