This approach would have the benefits (the argument goes) of making explicit the country’s implicit policy, making a disruptive devaluation less likely, and consequently, possibly reducing the risk premium that borrowers in the country must pay to borrow abroad.
I have already expressed reservations about so-called hard pegs for developing countries: Though less so than conventional pegs, they remain subject to speculative attacks, and they may make domestic macroeconomic adjustment more difficult. They also constrain the central bank’s ability to act as a lender of last resort in the event of a banking crisis.