Limiting Moral Hazard and Reducing Risk in International Capital Flows
The Choice of an Exchange Rate Regime
Bibliographic Data
| ID | 9755440 |
|---|---|
| Authors | Ronald I Mckinnon (Stanford University, corresponding author) |
| Year | 2002 |
| Volume | 579 |
| Issue | 1 |
| Pages | 200-218 |
| Publication date | 2002-01-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Annals of the American Academy of Political and Social Science (JOURNAL) |
| Journal identifiers | ISSN: 0002-7162 • E-ISSN: 1552-3349 |
| Publisher | SAGE Publications (PUBLISHER • US) |
| DOI | 10.1177/000271620257900113 |
| OpenAlex | W4301651445, W3125582200, W2142677023 |
| Language | EN |
| Citations received | 1 |
| References cited | 8 |
Monetary and financial management is much more difficult in emerging markets on the periphery of the industrial world than at the center. On the periphery, the domestic term structure of finance is short, and all foreign borrowing is denominated in foreign currency--usually dollars. An acute policy issue is whether the exchange rate should be fixed or more flexible in inhibiting banks and other financial institutions from cycles of overborrowing and undue foreign exchange exposure. This article shows that a "good" fix is better than floating, which in turn is better than a "bad" fix. But even a good fix must be complemented by strict domestic regulations forcing banks to preserve their capital and hedge their net foreign exchange exposure to stay good
Business · Capital (architecture · Currency · Economics · Exchange rate · Exchange-rate regime · Foreign exchange risk · Geography · Hedge · Incentive · International economics · Limiting · Market economy · Microeconomics · Monetary economics · Moral hazard · Banking stability, regulation, efficiency · Economic Theory and Policy · Engineering · Global Financial Crisis and Policies
| Citations per year | 0.06 |
|---|---|
| Citation span | 2010 - 2010 (1) |
| Highly cited | No |