Third, the fixed exchange rate can get badly out of line with those of trading partners.
SDRs were created in 1969 to support the Bretton Woods fixed exchange rate system.
In the long term, living with a fixed exchange rate demands wage and price flexibility.
Those consequences are becoming increasingly clear, starting in China, which has a fixed exchange rate.
The bigger problem, though, is the effect of fast economic growth coupled with a fixed exchange rate.
"Denmark's fixed exchange rate policy will be continued after yesterday's referendum, " the bank said in a statement.
Mr Mugabe has resorted to desperate measures, including price controls on staple foods and a fixed exchange rate.
The fundamental difference is that under a fixed exchange rate real income declines must come through nominal income declines.
Five years ago Russia had a big budget deficit, a fixed exchange rate and a lot of high-coupon debt.
The ensuing extra pain associated with the fixed exchange rate might weaken the wide public approval it still enjoys.
The currency board will come to look like a central bank with a commitment to a fixed exchange rate.
What brought Argentina down was the combination of its fixed exchange rate, which made its currency uncompetitive, with persistent fiscal deficits.
In 1960 the German mark had a fixed exchange rate with the US dollar which, in turn, was officially fixed to gold.
But then, President Nixon took the dollar off that fixed exchange rate system, and it's very hard to imagine how we could go back there now.
The real test for joining the euro should be whether an economy is flexible enough to cope with the strain of a permanently fixed exchange rate.
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In Argentina , all the main candidates bidding to succeed President Carlos Menem in October's presidential election ruled out any change in the country's fixed exchange rate.
Argentina is yet another country which has exchanged instability in its nominal economy, with a floating exchange rate, for instability in its real economy with a fixed exchange rate.
Smarting from criticism that it had turned a blind eye to loose budgets and an unsustainable fixed exchange rate, the Fund's staff were determined not to conclude yet another weak deal.
Many Argentines believe that the IMF, having been criticised for backing the fixed exchange rate long past its useful life, was slower and sterner with Mr Duhalde than with his predecessors.
There are "worries and fears" in Southern European countries that their efforts to reduce unit labor costs under a fixed exchange rate will "melt like snow in the sun, " Ms. Merkel said.
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But as raising interest rates to protect the currency means slowing the economy, a government might at some point decide that the pain of maintaining the fixed exchange rate is not worthwhile.
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The first task of this economic brains trust will be to cut Argentina's fiscal deficit, in order to reassure financial markets that the new government will stick to the country's rigidly fixed exchange rate.
Something similar happened in Argentina after it adopted its convertibility plan: people started to believe that biting the bullet of a permanently fixed exchange rate was enough, on its own, to cure the economy's problems.
The crises of the 1990s did, however, tend to have one thing in common: they all had some kind of fixed exchange rate, often a fixed peg or link to another currency, usually the dollar, or an exchange-rate band, again usually linked to the dollar.
"At the root of the euro upheaval is a balance of payment crisis caused by the cumulative effects of a 13-year-old one-size-fits-all monetary policy and a fixed exchange rate for a collection of disparate countries in very different stages of economic and structural development, " he argues.
This means that virtual items acquired within Entropia Universe have a real cash value, and a participant may, at any time, initiate a withdrawal of their accumulated PEDs back into real world currencies according to the fixed exchange rate, minus transaction fees, the minimum amount for a withdrawal is 1000 PED.
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The balance of payments and exchange rates were making news, and the slow break-up of the Bretton Woods fixed-exchange rate system was under way.
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Like other fixed exchange-rate systems, currency boards prevent governments from setting their own interest rates.
He announced a series of currency controls and fixed the exchange rate against the dollar (see article).
This process helps explain why equity and house prices reached peaks in recent years that were unknown under fixed exchange-rate systems.
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