European Dual Exchange Rates

  • Nancy P. Marion


In the early 1970s, many European countries faced a difficult predicament. Uniform fixed exchange rates allowed speculative capital movements to deliver large international reserve fluctuations, yet abandoning fixed exchange rates in favor of flexible rates could possibly deliver large exchange rate fluctuations that would disrupt trade. Between 1971 and 1974, several European countries, such as Belgium, France, and Italy, used a dual exchange market as a temporary middle-ground between the fixed and flexible rate extremes. Such an arrangement involved the formal establishment of separate exchange markets, with separate exchange rates, for current and capital account transactions.


Exchange Rate Interest Rate Exchange Market Trade Credit Foreign Asset 
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Copyright information

© Miguel A. Kiguel, J. Saul Lizondo and Stephen A. O’Connell 1997

Authors and Affiliations

  • Nancy P. Marion

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