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Unfortunately these three conditions cannot be reached within the terms of one economical system; one of them is always not compatible with the other two conditions. For example, if the state chooses free and unlimited currency conversion and fixed exchange rate policy, it is then unable to provide domestic interventions in order to control appearing economical disbalances and becomes very vulnerable to outer economical interventions and speculative attacks. If the state provides strong domestic policy and controls the appearing economical troubles such as inflation and unemployment, and at the same time offers free and unrestricted conversion of currencies, it will be unable to keep the exchange rate on a desired level because the changing demand for the currency and changing economical conditions will require to devalue or revalue the national currency. And finally, if the state chooses to have strong domestic policy and fixed exchange rates in order to reach economical stability, it will have to limit the amount of converted currencies to preserve the exchange rate in the proper scope.
Depending on these three main factors, three main exchange rate systems have appeared: fixed exchange rate system, floating (or flexible) exchange rate system, and managed exchange rate system which combined both above-listed systems.

1.6. Further development of exchange rate systems

Let us now return to historical development of exchange rate systems. The Bretton-Woods system existed until 1973. In 1971 there was an attack on the US dollar which made it significantly overvalued against other currencies; but the US government did not try to protect the dollar value, and therefore the floating of dollar exchange rate started. There was an attempt to return back to fixed rate system in 1973, but it didn’t have any significant effect and as other currencies were strongly linked to dollar value, the world exchange rate system gradually shifted from fixed exchange rate to floating exchange rate.
The attitude to this shift is different in different parts of the world, and it specified the emergence of three distinct types of exchange rate systems (they were listed above) and different combinations of these types.
It is historically conditioned that the US supports the idea of self-adjusting market; therefore the US government mostly supports floating exchange rate system. The European community has mostly provided the policies of regulating their economy and intervening into market mechanism; therefore countries of these region have hosen the direction towards a fixed exchange rate system and finally, towards a common currency in 1999.
The European Monetary System (EMS) has been created in 1979; it included 15 countries of Europe and offered the fixation of exchange rates of one currency compared to another one; the rates for the pairs of currencies differed which allowed more flexibility than simply fixing exchange rates. This system also allowed the change of the exchange rate in certain situations; for weaker countries the fluctuation barrier has been made wider than for dominating countries [3, p. 42]. As a development of this system, euro has been created; in 1999 all currencies have been fixed against euro and finally in 2002 all currencies were replaced by euro.
The countries of Asian region in their majority opted for the stability of their ex本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。