4/16/22, 6:24 AM Topic: Week 12 Discussion: Exchange rates and merged currency – Canvas – CSU

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This is a graded discussion: 15 points possibledue Apr 18

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For this week's discussion post, we are going to talk about some trade-offs involving the adoptionof different monetary policies—namely a floating exchange range, a pegged exchange rate or amerged currency—focusing on the impacts of printing local currency versus using a merged one.

In this video (https://www.youtube.com/watch?v=HOv1H4ht0XI)

Barry Eichengreen: Pegged exchange ratesBarry Eichengreen: Pegged exchange rates

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, Dr. Barry Eichengreen explains some of the problems associated with floating exchange rates,and what some countries do to try to avoid those problems. Particularly, he uses three historicalexamples of pegged or merged currency: the Golden Standard of the late 19th Century, theEuropean Monetary System of the 1980s and 1990s, and the Euro. What are some of the benefitsof using a pegged or merged currency, when compared to a floating exchange rate, and what aresome of the problems identified by Professor Eichengreen? What are some of the ways through

12 Week 12 Discussion: Exchange rates andmerged currency

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Faisal Alzneidi

4/16/22, 6:24 AM Topic: Week 12 Discussion: Exchange rates and merged currency – Canvas – CSU

https://colostate.instructure.com/courses/138100/discussion_topics/1321514 2/3

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which a country can alleviate the impacts of having a merged or hard pegged currency?Specifically, what are some of the characteristics of the Euro Zone that make it hard for countriesto alleviate the impacts of an economic crisis? Finally, consider some communities in the UnitedStates that use their own local currency instead of the U.S. Dollar, like the Ithaca Hours(http://www.ithacahours.com/) (Ithaca, New York), the BerkShares (http://berkshares.org/) (Berkshires region, Massachusetts), and the Bay Buck (http://www.baybucks.org/) (TraverseCity, Michigan). Given your knowledge of exchange rates and the benefits and problems ofprinting your own currency, do you think that those local policies make such communitieseconomically stronger? Justify your answer.

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4/16/22, 6:24 AM Topic: Week 12 Discussion: Exchange rates and merged currency – Canvas – CSU

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