a. How should IMF interventions differ in the cases of first- and second-generation currency
b. “Capital account liberalization is like a medicine that is usually beneficial but often
produces horrific side effects. Such a medicine cannot be left unregulated.” Discuss.
c. National governments do not try to restrict the flow of finances between regions and
sectors within a country. Why should they therefore use capital controls to restrict flows of
finance between nations?
d. China currently has a fixed exchange rate, capital controls, and independent monetary
policy. Is this consistent with the impossible trilogy? How do you think these policies may
change as China grows richer?
e. In a pure currency board, the central bank can only print domestic currency up to the
value of the foreign currency reserves it owns. What would be the impact if it was allowed to
include in its assets not just foreign currency reserves but also the central bank holding of
f. To what extent do you think the economic success of the United States is due to the
fact it has a single currency? What lessons does this hold for the European Union?