This paper describes the relationship between central bank interest rates and exchange rates under a capital control regime. Higher interest rates may strengthen the currency by inducing owners of local currency assets not to sell local currency off shore. There is also an effect that goes in...

The global financial crisis of 2008 led to the most severe decline in production and employment and in world trade since the Great Depression of the early 1930s. Hundreds of banks and other financial firms failed in the United States, Great Britain, Ireland, Spain, the Netherlands, Germany, and...