Exchange Rate Regimes: Is the Bipolar View Correct?

33 Pages Posted: 19 Jun 2001

See all articles by Stanley Fischer

Stanley Fischer

Bank of Israel; National Bureau of Economic Research (NBER); International Monetary Fund (IMF)


The bipolar or two-corner solution view of exchange rates is that intermediate policy regimes between hard pegs and floating are not sustainable. This paper argues that the proponents of the bipolar view have probably exaggerated their point. The right statement is that for countries open to international capital flows, softly pegged exchange rates are crisis-prone and not sustainable over long periods. However a wide variety of flexible rate arrangements remains possible; and monetary and exchange rate policy in most countries should not and will not be indifferent to exchange rate movements.

Suggested Citation

Fischer, Stanley, Exchange Rate Regimes: Is the Bipolar View Correct?. Available at SSRN: or

Stanley Fischer (Contact Author)

Bank of Israel ( email )

P.O. Box 780
Jerusalem, 91907

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States