In any debt swap, a country must surrender an asset to extinguish a liability. To retire its foreign debt, government must first purchase internationally traded assets from the domestic private sector. How this purchase is financed has important macroeconomic implications. Money-financed swaps...

Floating exchange rates seem to be gaining ground in Latin America, East Asia and the transition economies. The recent crises left many economies with no alternative but to float. Others have moved toward floating, searching for greater flexibility and insulation from external shocks. The...