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But these became unnecessary in an era of floating rates.
By 1973, fixed exchange rates had been abandoned in favour of floating rates.
In part, that was because the move to floating rates was not complete.
But this might not be enough: currency surprises happen even with floating rates.
Generally, small countries with relatively large trade sectors disliked floating rates.
1. Peg the interest rates that core banks can pay on insured deposits to floating rates on Treasury securities.
By proposing that countries move to freely floating rates, Mr. Sachs hopes to minimize the possibility of sudden currency collapses.
They can borrow most cheaply at floating rates but this option lacks the stability that fixed-rate borrowing gives.
Depending on whether floating rates rise or fall, one will end up owing money to the other.
That's the difference between the fixed rate paid by the issuers and the floating rates they receive.
David Bogle, chief executive of Hightown Praetorian HA, argues that social landlords could make considerable savings if more of their bank borrowings were at floating rates of interest.
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