This has also been reflected in the acute fluctuations in some bank share prices over recent weeks and raises questions as to how effectively monetary policy stimuli are transmitted via the banks. Admittedly, banks are benefiting from lower interest rates in the short term as their liabilities tend to have shorter maturities than their assets.
Nor were these macroeconomic costs compensated for by greater external stability; in both episodes, doubts about the sustainability of the peg generated speculative attacks that ultimately forced the pound off its fixed rate. Overall, the case for floating exchange rates among the United States, Japan, and the euro zone seems to me to be compelling.