Hard Peg

What is Hard Peg?


1.

In economics, a policy in which the authorities insist on some permanent, precise guarantee of the value of the local currency to some other thing: a unit measure of gold, the US dollar, the euro, or the pound. Historically, the US dollar had a hard peg to gold from 1946 to 1971, while other currencies in the developed world had a hard peg to the US dollar. Since 1971, most of the world's money is in floating currency (whose relative value is set by the free market).

Nonetheless, advocates of hard pegs frequently downplay the ... difficulties of establishing greater nominal flexibility in fiscal spending and wages...

See economics, money, foreign exchange, finance


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