th flexible exchange rates, critical developments express mainly in massive real appreciation and depreciation. This describes developments, much stronger at the exchange rate appreciates (depreciates), as it corresponds to the difference between prices and wages vis. A particularly dramatic example of such a crisis is the development of Japan in the years 1990 to 1995 inclusive.
Although the country was hit in the late eighties by the collapse of a large speculative bubble, which greatly weakened domestic demand, it came from 1990 to 1995 to a massive appreciation of the yen against the dollar (and partly also against the European currencies). In this way ('pricing-to-market'), the Japanese companies were forced to reduce their profit margins in the export business drastically or incurring a decline in their export business. As a result, corporate balance sheets and indirectly the banks' balance sheets deteriorated. It is therefore not surprising that many countries are no longer willing to suspend their economies completely passive erratic fluctuations in the foreign market.
4. The concept of the 'managed floating' “管理浮动”的概念
The preferred today by many countries strategy of 'managed floating' is distinguished in that it avoids the problems of both the flexible and the solid (or pre-announced) courses.
The 'managed floating' differs from the flexible courses in that exchange rate movements will no longer no longer predominantly left alone and often the foreign exchange market. This makes it possible in particular to avoid the problems associated with strong real appreciation problems.
Compared to fixed (or predictable) exchange rates is the 'managed floating' the advantage that it does not allow for predictability of price development any more is a prerequisite for seemingly risk-free capital gains. It also allows a much more flexible policy mix than is the case in particular for fixed exchange rates.
For an understanding of the 'managed floating' it is necessary to briefly describe the main principles of such a strategy. Interventions in the foreign exchange market, it is crucial to distinguish between a situation of strength and weakness of the domestic currency:
Is the domestic currency downward pressure is only limited possible for the central bank to support this through interventions in the foreign exchange market. Since they sold it buys currency reserves and its currency is confronted with the hard currency reserves budget constraint of a limited inventory.
For upward pressure on the domestic currency, the central bank buys the foreign currency and is the domestic currency in the market. In this situation, there is no budget constraint. In principle, the central bank can now intervene without limit.
An important characteristic of a policy of 'managed floating' is the fact that the central banks despite their - in some cases massive - interventions in the foreign exchange market really wish to pursue an independent interest rate policy. While this is considered by many theorists as impossible is the practice of many central banks that this certainly is given a leeway.
To understand these relationships, one has to take into account, first, that the intervention of a central bank with a strong currency always an extension of the domestic banking liquidity ('cash basis') are connected. Separately, they would therefo
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