- 01 Jun 2023 09:11
#15275631
Pegging your currency to other stronger ones has advantages, but it is also a double-edged sword that can ruin a country if it's not handled right. Can Turkey get more ruined than it is today? Yes, it is possible.
It puts all your monetary policy in the hands of foreign central banks. If the value of your currency deviates in value from what it should have, it is increasingly vulnerable to speculative attacks and requires the state to defend its value, something that has bankrupted many in the past. China had their currency pegged for 2 years after the financial crisis of 2008 and it was successful for them. On the other hand, we have Argentina, whose fixed exchange rate with the US dollar became a complete disaster they still have not recovered from.
Sandzak wrote:Monte Negro is also not part of the EU but they have the Euro as currency.
Bosnia has the "Konvertibilna Marka" which is tied to the Euro, 2 KM are 1 Euro.
Pegging your currency to other stronger ones has advantages, but it is also a double-edged sword that can ruin a country if it's not handled right. Can Turkey get more ruined than it is today? Yes, it is possible.
It puts all your monetary policy in the hands of foreign central banks. If the value of your currency deviates in value from what it should have, it is increasingly vulnerable to speculative attacks and requires the state to defend its value, something that has bankrupted many in the past. China had their currency pegged for 2 years after the financial crisis of 2008 and it was successful for them. On the other hand, we have Argentina, whose fixed exchange rate with the US dollar became a complete disaster they still have not recovered from.
“Without deviation from the norm, progress is not possible.”
― Frank Zappa
“Fault always lies in the same place: with him weak enough to lay blame.”
― Stephen King
― Frank Zappa
“Fault always lies in the same place: with him weak enough to lay blame.”
― Stephen King