As we have seen, fixed and other rigid exchange rate regimes are highly vulnerable to sudden capital outflows and crises. Especially if the domestic fundamentals are not perfect. Nowadays many emerging market countries have chosen a regime where the currency floats but the authorities, in practice, still target an exchange rate level.
This fear of floating may well be a adequate exchange rate regime for many emerging economies. In these countries credibility is still low, dollarisation is high and the intermediation of monetary policy is unstable. But as the countries develop economically and institutionally, a more flexible exchange rate and proper inflation target may well represent a less costly regime choice.