1) The mobility of international capital flows is causing emerging market nations to choose between a free-
floating currency exchange regime and a currency board (or taken to the limit, dollarization). Describe how e
ach of the regimes would work and identify at least two likely economic results for each regime.
2) On January 4, 1999 the member nations of the EMU introduced a new unified currency, the euro, to replace
the individual national currencies of many member nations. Identify and explain several of the arguments ma
de both for and against the euro. Do you think the euro has proven to be a "good" idea? Why/Why not?
P a g e
M i d T e r m E x a m - I n t e r n a t i o n a l F i n a n c e