chapter  1
To Peg or Not to Peg, That is the Question
WithMichael G. Hall
Pages 14

This introduction presents an overview of the key concepts covered in the subsequent chapters of this book. The book attempts to explain differences in exchange-rate policies and the use of pegging among developing countries. The interests and lobbying of domestic banks explain much of the drive behind maintaining a peg until a crisis erupts. The book examines the theories of exchange-rate regime choice and reports on the methods and results of the statistical tests. It illustrates the connection between financial systems and exchange rates with the experience of Thailand, and the connection in the more complex case of Mexico. Little data is available to the public concerning the lobbying of interest groups in developing countries. The case studies rely on what data is available to the public, such as central bank data on economic conditions or the operations of banks. The book also explores the implications of the research for theory and policy concerning the international monetary system.