The case for fixed exchange rates

Once the US dollar replaces the SDR as the single reserve currency, the dollar could qualify to be a common currency for a select number of countries

In an earlier article (Business Standard, March 24, 2019), the need for dispensing with the outdated relic called special drawing rights (SDRs) was discussed. This article deals with the implications of abolishing SDRs and contemplates a return to the Bretton Woods system of fixed exchange rates, where the value of a currency is determined by the US dollar and gold.     

           

SDRs, an international reserve asset created by the International Monetary Fund (IMF) in 1969 to support the Bretton Woods’ fixed exchange rate system, should have been abandoned immediately after US President Richard Nixon’s announcement