If policymakers’ first priority is stability of the domestic economy, Friedman reasoned, then why not adopt a system - namely, flexible exchange rates - that provides the necessary monetary independence without restrictions on the flow of capital or goods? When Friedman wrote about fixed and flexible exchange rates, a switch from the Bretton Woods fixed-exchange-rate system to a floating-rate system seemed quite unlikely.
In this, as in many other matters, he was prescient, as the major currencies have now been successfully floating since the breakup of the Bretton Woods system in the early 1970s. These two recommendations have had major effects on institutional design and policy practice.