The exchange rate system is based on the standard itself or the legal gold content as the benchmark to determine the exchange rate. The exchange rate between currencies is basically fixed, and its fluctuation is limited within a certain range.
Fixed exchange rate systems fall into the following two categories :(1) fixed exchange rate systems under the gold standard.
Its characteristics are: the basis of the decision is the ratio of the gold content of each country’s gold coins, namely the mint parity;
Market exchange rate fluctuates up and down around seigniorage parity with the change of supply and demand;
The fluctuation of exchange rate is restricted by the gold transport point, which is relatively stable;
The formation of exchange rate is spontaneous, there is no special institution for the formulation and management of exchange rate in each country, and there is no unified international arrangement and regulations on exchange rate.
(2) the fixed exchange rate system under the paper currency circulation system.
After the Second World War, the fixed exchange rate system centered on the US dollar was established according to the Fund Agreement, which stipulated that the currencies of IMF member countries should establish a fixed exchange rate with the US dollar according to the legal gold content, namely the gold parity.
