Even though they can last for decades, fixed exchange rate regimes are increasingly seen as temporary arrangements, (Eichengreen, 1994). The hollowing out hypothesis, see, e.g. Fischer (2001), holds that fixed but adjustable exchange rate regimes of various kinds are scheduled to disappear in...

The estimation of an ordered probit model for currency reforms trying to end 31hyperinflations and three big inflations of the 20th century shows that the introduction of anindependent central bank and the adoption of a credibly fixed exchange rate are crucial for the successof a currency...