Emerging-market economies may need more time to develop well-functioning financial markets and institutions and to achieve sufficient policy credibility to realize the benefits of a floating exchange rate.26 But Canada’s experience is not unique.
Many other countries have learned from our experience and have realized many of the same benefits I have described today by adopting a framework anchored on a flexible exchange rate and an inflation target. Just as the gold standard was once accepted as orthodoxy, this monetary policy framework has proven to be the most durable monetary policy standard in the post-war period.