So, many of these countries were forced to abandon the peg as an anchor and had to opt for a flexible exchange rate. But an anchor is still needed. Otherwise, the freedom of the currency to float could undermine confidence in its value, both at home and on world markets. Targets for domestic inflation provide such an anchor for the currency.
In the last few years, a growing number of emerging-market economies have moved to flexible exchange rate regimes, and have also adopted inflation targets. In several cases, Canada has played an important role in that process.