Let me start with the first quote “To give you a striking example of macroeconomic performance depending on the underlying exchange rate regime, the countries with hard peg regimes have recently experienced a very rapid catching-up process, with cumulative real GDP growth standing on average at 18% in the past two years, which is almost twice as fast as the growth rates observed in the countries with flexible regimes.
And where government debt is an asset held throughout society, default is probably a cure worse than the disease. A more benign tool is foreign exchange reserves. Standard accounts traditionally emphasise the role of reserves in meeting balance of payment needs, 30 especially in the context of inflexible exchange rate arrangements.