The degree of convergence tends to be BIS Review 97/1997  -8-  higher with fixed but adjustable exchange rates. If there is, nevertheless, no adequate convergence, costs will depend on whether there is a timely realignment. If prompt action is taken, the consequences will be contained.
By contrast, if the realignments take place only under pressure from the markets, high costs can easily arise -- not just for the country itself, by the way. A “case” like this can easily negate the credibility of a whole system or make the unilateral pegging of other countries -- even those in other continents -- more difficult.