I propose to examine the different sides of the argument with respect to a floating currency in as simple and straightforward a manner as possible. The transactions costs of a floating currency When the amount of cross-border trade and financial transactions is as large as ours is with the United States, the need to exchange currency raises the cost of such transactions.
Moreover, if the currencies involved are floating, so that the future level of the exchange rate is uncertain, there is also a foreign exchange risk to consider and to hedge against.