She also introduced a floating exchange rate regime and lifted controls on currency trading.
It is more flexible (with a floating exchange rate) and its central bank is still soundly run.
By devaluing a currency in a floating exchange rate environment, the result is that trade booms and foreign reserves balloon.
However, in 1971 under President Richard Nixon, the Bretton Woods system collapsed and the major currencies shifted to a floating exchange rate regime.
One big difference is that Australia, unlike the East Asians before their currencies plunged, has a floating exchange rate which can adjust smoothly to market pressures.
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.
In developing countries with immature financial markets, a freely floating exchange rate may not be sensible because a small number of foreign-exchange trades can cause big swings in currencies.
"We have had a tough year, but through stringent fiscal policy, the new floating exchange rate regime, and extensive structural reforms, we have come out of intensive care unit, " Mr Dervis said.
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.
Mexico was reforming at the time, basically privatizing the banking sector and floating the exchange rate.
It is conceivable that we might abandon a floating exchange-rate system, as the BRIC countries, especially China, are not as happy with today's system as many in the West are.
In an effort to obtain loans to service its debt, Seychelles in November 2008 signed a standby arrangement with the IMF that mandated floating the exchange rate, removing foreign exchange controls, cutting government spending, and tightening monetary policy.
IR You rightly point out (Economics focus, January 29th) that the combination of a floating exchange-rate regime with a monetary framework based on explicit inflation targeting is becoming popular in emerging economies (as well as in industrial countries, you may also add).
The paradox is that part of the euro's purpose is to re-empower the European electorate by equipping the EU with a currency strong enough to challenge the rule of the tiny group of foreign-exchange dealers who, in a floating exchange-rate regime, can settle the fate of national economic policies.
If more people want to pay a fixed rate in exchange for a floating rate than want to receive a fixed rate, the swap spread the fixed interest rises compared with Treasury yields.
In particular, both China and Russia have widened their exchange rate floating bands.
The idea was a cold-turkey cure for endemic balance-of-payments problems, turning economic management on its head by floating sterling and letting the market dictate the exchange rate.
In a typical interest-rate swap, one party agrees to exchange a fixed-rate obligation with another that has a floating, or variable, rate exposure.
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Typically, one series of cash flows would be considered the fixed leg of the agreement while the other would be less predictable, such as cash flows based on an interest rate benchmark or a foreign exchange rate, usually referred to as the floating leg.
The current stampede of industrial and emerging countries alike toward floating-cum-inflation targeting, and away from exchange-rate and monetary anchors, suggests that this combination is the only real alternative to giving up a national currency in favour of monetary union or dollarisation.
Floating the yuan would also relieve the monetary authorities of self-defeating exchange rate intervention.
This exchange rate liberalization has continued and while the ruble is not a freely floating currency, it is much closer to being one that it was in the past.
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