My country just started to “float” the currency to get money from IMF and WB, what are going to be the day to day results of this decision?
In: Economics
If your money is fixed, you can trade it for whatever the exchange is. To American dollars, or whatever. Your country has guaranteed that it’ll keep that worth. This stifles growth, as no one wants your money, they want what it’s pegged to. Trading to the other currency locks them into your country, and if there’s no worth there, nothing changes. Small countries like Monoco have no exports, so don’t care about monetary policy. They have money come in from tourists and investments. They’re happy.to take other country’s money.
If it floats, it’s worth what people will pay for it. If your country doesn’t sell things, no one wants to buy your country’s money. Then your money is worthless, and everyone who worked a life to earn a bank account full of worthless money will be pissed.
If your country does make things to sell, then the people who get in early start with an advantage, and their money will only grow upward. Until it doesn’t.
Latest Answers