Confidence would most likely be eroded if the Bank succumbed to the request for the underwriting or increase in the outright purchase of government bonds, with or without a limit on the amount or the period.
Deficit countries found the adjustment even more difficult because of downward wage and price stickiness. Once the shocks were large and persistent enough, the consequences of forfeiting monetary independence and asymmetric adjustment ultimately undermined the system.5  1978). China, on the other hand, is very open, with imports/GDP around 30 per cent, and it accounts for an ever-increasing share of world trade.