- Floating currency
A floating currency is a
currency that uses afloating exchange rate as itsexchange rate regime . A floating currency is contrasted with afixed currency .In the modern world, the majority of the world's currencies are officially but not really floatingFact|date=February 2008, including the most widely traded currencies: the
United States dollar , the Japanese yen, theeuro , the British pound and theAustralian dollar . TheCanadian dollar most closely resembles the ideal floating currencyFact|date=February 2008, since their central bank has not interfered with its price since it officially stopped doing so in 1998. The United States is a close second with very little changes in itsforeign reserves ; by contrast, Japan and the UK continually interfere with the prices of their respective currenciesFact|date=February 2008. From 1946 to the early 1970s, theBretton Woods system made fixed currencies the norm; however, in1971 , theUnited States government abandoned thegold standard , so that the US dollar was no longer a fixed currency, and most of the world's currencies followed suit.A floating currency is one where targets other than the exchange rate itself are used to administer monetary policy. See
open market operation s.The
People's Republic of China recently unpegged their currency, which was formerly pegged to theUS dollar , and allowed it to float within a carefully managed range of values relative to the dollar and other currencies.ee also
*
Balance of payments
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