The case for fixed exchange rates rests on arguments about monetary discipline,speculation,uncertainty,and the lack of connection between the trade balance and exchange rates.

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The case for fixed exchange rates does indeed rest on arguments about monetary discipline, speculation, uncertainty, and the lack of connection between the trade balance and exchange rates. Advocates of fixed exchange rates argue that fixing the value of a currency to another currency or a fixed standard can provide a level of stability and predictability that can encourage investment and trade. They also argue that fixed exchange rates can deter currency speculation and reduce uncertainty caused by fluctuations in exchange rates. Finally, they contend that the connection between trade balances and exchange rates is weak, and that fixing exchange rates can help reduce imbalances and distortions in trade.

The Case for Fixed Exchange Rates Rests on Arguments About