Gives the answer any two of the following prompts:
Compare and contrast conventional pegs and currency boards. What are the factors that drive the choice between these two regimes?
Explain the implications of "undervalued" currency pegs (Hint: China's dollar peg was established at an undervalued rate).
Explain the implications of "overvalued" currency pegs (Hint: The Asian crisis was triggered by overvalued exchange rate pegs such as the Thai baht peg to the U.S. dollar).
What is sterilization? Why do countries with currency pegs need to resort to sterilization?
What are the disadvantages of a fixed exchange rate regime? Consider the Chinese case. Although China has successfully sustained its currency peg, it has also paid a relatively high price for this success. In your answer, make sure that you focus on the undervalued peg, sterilization, and reserve accumulation.