Indeed, most Memoranda of Understanding between home and host authorities tend to take a soft-edged approach to the respective obligations of the parties, creating too much uncertainty for them to be useful in a crisis. Some form of formalised cooperation arrangement between the home and host authorities is therefore likely to be necessary.
One traditional argument in favor of fixed exchange rates for developing countries focuses on their usefulness in so-called heterodox programs for overcoming high inflation.8 According to this view, the advantage of fixing the exchange rate as one element of an anti-inflation program (along with fiscal reforms and other policy changes) is that fixing the rate is more visible, more credible, and easier to explain than a commitment to stabilizing prices directly.