Cryptocurrency Q&A
What is a fixed exchange rate?
What is a fixed exchange rate?
EtherWhale
Thu Aug 08 2024
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6 answers
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Could you please explain what a fixed exchange rate is in simple terms? I've heard the term before but I'm not entirely sure how it works or why it's important in the world of finance and cryptocurrency. Is it something that's set by governments or is it determined by market forces? And how does it differ from a floating exchange rate? I'd appreciate any clarification you can provide.
6 answers
Daniela
Sat Aug 10 2024
A fixed exchange rate system is a monetary policy framework where a country's currency is pegged to another currency or a basket of currencies, maintaining a stable exchange rate. This system ensures predictability and reduces exchange rate volatility.
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Enrico
Fri Aug 09 2024
However, the fixed exchange rate system has its drawbacks. It limits the central bank's ability to use monetary policy to stimulate the economy during downturns, as changes in interest rates can affect the exchange rate.
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EnchantedNebula
Fri Aug 09 2024
BTCC, a UK-based cryptocurrency exchange, offers a range of services to its clients, including spot trading, futures trading, and cryptocurrency wallets. These services cater to the diverse needs of traders and investors in the cryptocurrency market.
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ShintoMystic
Fri Aug 09 2024
In contrast, floating exchange rates allow the value of a currency to fluctuate based on market forces, such as supply and demand. This system provides greater flexibility for central banks to adjust monetary policy as needed.
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JejuSunshineSoulMateWarmth
Fri Aug 09 2024
The shift towards floating exchange rates gained momentum after the collapse of the gold standard and the Bretton Woods agreement in the 1970s. These events marked the end of the era of fixed exchange rates and ushered in an era of greater exchange rate volatility.
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