But the world was left with unstable floating exchange rates and all of their troubles.
Milton Friedman was pushing floating exchange rates and saying that they would end the perpetual crisis.
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Today the world uses a system of floating exchange rates based on "fiat" or government-created money.
The IMF supports that choice, whether floating exchange rates, fixed exchange rates or dollarization.
This shift to floating exchange rates should in theory have reduced the need to hold reserves.
What makes this time different, on a global scale, however, is the reality of floating exchange rates.
Others argue that floating exchange rates make no sense for small emerging economies.
The switch to floating exchange rates has helped to propel a dramatic turnaround in Latin America's balance of payments.
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The example I have in mind now is my study of the international adjustment mechanisms under fixed and floating exchange rates.
These folks, and their cousins at the IMF, routinely recommend policies that are too often destructive: floating exchange rates, devaluations, higher taxes.
This was done in a regime of increasingly freer floating exchange rates.
In other words, free-floating exchange rates are probably not the best option.
Now given we live in a globalised financial market, with free-floating exchange rates and no capital controls, how would you "do" financial repression?
In industrial countries, remarkably little evidence exists to suggest that the volatility of floating exchange rates does in fact harm trade or investment.
But there is little appetite to abandon the world of floating exchange rates, while free trade talks, also encouraged at Bretton Woods, have stalled.
The new era is one in which governments are using floating exchange rates, near-zero interest rates and vast fiscal deficits to protect their economies.
Money was allowed to flow freely across borders and, in an era of floating exchange rates, the constraints on credit growth were much reduced.
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He was one of the first people to predict, correctly, that a system of freely floating exchange rates, unconnected to gold, would work just fine.
He thereby acknowledges that at least for economies with small financial sectors floating exchange rates are feasible in the long run only if capital-market integration is slowed down.
All the while, Milton Friedman kept pointing out that these crises would all go away if we went to a system of flexible or floating exchange rates.
In a contrary move, the region's larger countries have mainly switched to floating exchange rates, adopted with success by Mexico (1995), Brazil, Chile and Colombia (all in 1999).
But this is mainly a world of floating exchange rates.
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Although Guatemala has legalised the dollar as a domestic currency in parallel with its own quetzal, many of El Salvador's other neighbours and economic competitors have floating exchange rates.
Significantly, the vast expansion in markets for options, futures and derivatives occurred mostly after 1971, with the onset of floating exchange rates, wildly-gyrating interest rates, and swings in commodity prices.
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Unilateral or accelerated adoption of the euro would make far less sense for a third group of bigger countries with floating exchange rates: the Czech Republic, Hungary, Poland and Romania.
Back in the world of floating exchange rates, countries wishing to have a trading advantage can manipulate their currency to be low and thereby have ultra-competitive prices for export goods.
Floating exchange rates destabilise trade and investment by wrenching relative prices away from their fundamental values (that is, from the values that would put the corresponding exchange rates at purchasing-power parity).
With floating exchange rates, the trade constraint was removed.
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That is hurting not just the West but also other emerging countries (especially those with floating exchange rates) and indeed China itself, which needs to get more of its growth from domestic consumption.
With inflation under much better control, floating exchange rates (China is a big exception) and well-stocked foreign-exchange reserves now dominate in the emerging world, providing protection against falling exports and flighty foreign investors.
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