Central Bank of Iceland paper on exchange rate regimes

Central Bank of Iceland

A Central Bank of Iceland paper, published on Monday, says small, rich countries would be best placed to switch to a fixed exchange rate regime in order to reduce exchange rate volatility.

Francis Breedon, Thórarinn Pétursson and Andrew Rose, the paper's authors, examine which monetary policy and exchange rate policy in Iceland and whether freely floating exchange rates provides insulation from external shocks. They note that while a floating exchange rate regime can in principle be a buffer

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