Joint Float
What is 'Joint Float'
Two or more countries agreeing to keep their currencies at a same exchange rate relative to one another, but not relative to other countries. The countries involved in a joint float agreement form a sort of partnership where their currencies move jointly. The central banks of the countries participating in this agreement maintain the joint float by buying and selling each others currencies.
Explaining 'Joint Float'
Countries that decide to link their currencies do it for various reasons. For example, a small country next to a larger one will be affected more severely by currency exchange rates. In this case, a minimal shift from one currency to another will impact the price of the currency in the smaller country more than it would impact the larger country. The goal is that if the countries form a joint float by linking their currencies to form a fixed exchange rate, their currencies become stronger and better able to withstand currency fluctuations. West Germany, France, Italy, the Netherlands, Belgium and Luxembourg created a European joint float in 1972.
Further Reading
Trade and financial interdependence under flexible exchange rates: the Pacific area
www.nber.org [PDF]
… I. Bloomfield, Arthur Irving, joint author … And, for a variety of reasons, some central banks may want their currencies to float jointly with others or be pegged … Since widespread floating will persist for a considerable period and the float will be managed in varying degrees by national …
www.nber.org [PDF]
… I. Bloomfield, Arthur Irving, joint author … And, for a variety of reasons, some central banks may want their currencies to float jointly with others or be pegged … Since widespread floating will persist for a considerable period and the float will be managed in varying degrees by national …
heinonline.org [PDF]
… I. Bloomfield, Arthur Irving, joint author … And, for a variety of reasons, some central banks may want their currencies to float jointly with others or be pegged … Since widespread floating will persist for a considerable period and the float will be managed in varying degrees by national …
www.sciencedirect.com [PDF]
… I. Bloomfield, Arthur Irving, joint author … And, for a variety of reasons, some central banks may want their currencies to float jointly with others or be pegged … Since widespread floating will persist for a considerable period and the float will be managed in varying degrees by national …
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJSH200303000.htm'>PDF]
… I. Bloomfield, Arthur Irving, joint author … And, for a variety of reasons, some central banks may want their currencies to float jointly with others or be pegged … Since widespread floating will persist for a considerable period and the float will be managed in varying degrees by national …
search.proquest.com [PDF]
… I. Bloomfield, Arthur Irving, joint author … And, for a variety of reasons, some central banks may want their currencies to float jointly with others or be pegged … Since widespread floating will persist for a considerable period and the float will be managed in varying degrees by national …
www.sciencedirect.com [PDF]
… I. Bloomfield, Arthur Irving, joint author … And, for a variety of reasons, some central banks may want their currencies to float jointly with others or be pegged … Since widespread floating will persist for a considerable period and the float will be managed in varying degrees by national …
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Q&A About Joint Float
Why do countries decide to link their currencies together?
Countries that decide to link their currencies do it for various reasons. For example, a small country next to a larger one will be affected more severely by currency exchange rates. In this case, a minimal shift from one currency to another will impact the price of the currency in the smaller country more than it would impact the larger country. The goal is that if the countries form a joint float by linking their currencies to form a fixed exchange rate, their currencies become stronger and better able to withstand currency fluctuations.
What is a joint float?
A joint float is when two or more countries agree to keep their currencies at the same exchange rate relative to one another but not relative to other countries.
What does "link" mean in terms of money?
Linking means that two or more things are connected so they move together as one unit. This can be done with money as well; for example if you have two bank accounts linked together then any transactions made on either account affect both accounts equally because they are linked together as one unit. If you were using cash instead of bank accounts then you could say your cash was linked because every time you spent some cash it would take away from your total amount of cash available until there was no longer any left which would cause your remaining cash supply (or what's left) to be unlinked from what's left over from before since they were once linked but now aren't anymore due to spending all your cash leaving nothing behind after spending everything leaving only an empty wallet with no money inside anymore.)
Which European nations created a joint float in 1972?
West Germany, France, Italy, Netherlands, Belgium and Luxembourg created a European joint float in 1972.
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