In this paper we review what is known about exchange rate crises. We then draw out lessons for the choice of exchange rate regime. We show the dilemmas of exchange rate management are particularly acute for small, open developing economies. Freely floating exchange rates are not tolerable for...

First problem: Some of the countries of Eastern Europe and the former Soviet Union are sufficiently eager for price stability that they are willing to sacrifice monetary sovereignty, and to tie their fate to a reliable international currency. Neither the deutschemark nor the dollar, however,...

This paper presents an empirical analysis of speculative attacks on pegged exchange rates in 22 countries between 1967 and 1992. We define speculative attacks or crises as large movements in exchange rates, interest rates, and international reserves. We develop stylized facts concerning the...