After the holidays, cash will flow back into the banking system in exchange for customer deposits and will, in turn, flow from the banks into the Federal Reserve Banks in exchange for bank reserve deposits.
Mexican exchange houses serve as a legitimate parallel banking system in Mexico.
Its fragile banking system could not cope with unpredictable swings in exchange rates.
Yet faced with the deepest slump since the Great Depression, politicians in many advanced economies feel powerless: they have discovered that many of the most powerful tools to alter the distribution of resources power over interest rates, exchange rates, trade and fiscal policy, and the banking system are placed beyond their reach.
But a prolonged period of sky-high interest rates, which may be necessary to defend the exchange rate, can wreak havoc with a country's banking system.
For instance, bitcoin exchange endpoints where bitcoin interfaces with national fiat money and the banking system is a possible point of regulation due to current AML and KYC guidelines in most countries.
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Also, for a commodities exchange to do well, the country needs to have a good banking system.
In essence, he was directly battling the British central banking system in its attempt to keep the pound artificially competitive in foreign exchange markets.
But full liberalisation of interest rates and the exchange rate must still be some way off given the fragility of the banking system.
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With the benefit of hindsight, most economists have been critical of the August 2001 deal for Argentina, which simply postponed rather than prevented the collapse of the exchange-rate peg with the dollar and, with it, the country's banking system.
The three key elements of this policy remained the adoption of a floating exchange rate system, the anchoring of monetary policy to the inflation target and the acceleration of banking sector reforms, he said.
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