2_IMF

• hard pegs (25 countries): fixed exchange rates with a currency pegged o to another currency (‘anchor currency’, eg the US-Dollar), o to a currency basket, o or to gold (‘gold standard’)

• intermediate regimes (‘soft pegs’) – 83 countries (China)

• floating (flexible) exchange rates, determined by supply and demand on the markets (65 countries, Western States including the US and the Eurozone, Russia)

Currency manipulation is when a country intentionally influences the exchange rate of its currency to gain economic advantages.

• Buying foreign currency (e.g. USD): → Increases demand for foreign currency → Increases supply of domestic currency → Domestic currency weakens (depreciates) → Goal: Boost exports, support domestic economy

• Selling foreign currency: → Increases supply of foreign currency → Reduces domestic currency in market → Domestic currency strengthens (appreciates) → Goal: Make imports cheaper, fight inflation

• coordination and monitoring of monetary policies, especially exchange rate policies. → countries should manage their currencies wisely and cooperate

• support for countries with economic problems → the goal is a stable currency system and free exchange of currencies, which are the key foundations of the international monetary system