Browse Economics

Pegs, Target Zones, and Trilemmas

Exchange-rate system constraints and arrangements used to analyze currency pegs and managed fluctuation bands.

Pegs, Target Zones, and Trilemmas explains exchange-rate measures, real and nominal currency values, currency regimes, pegs, floats, convertibility, devaluation, monetary standards, and capital controls used in finance.

Use these pages when currency movements, exchange-rate measurement, cross-border cash flows, country risk, or balance-of-payments pressure affects a finance decision. It sits inside Exchange Rate Systems and History, so readers can move up when the broader economics context matters.

This landing page points readers toward Adjustable Peg, Dirty Floating, Macroeconomic Trilemma, and Target Zone. Choose the narrower page when the term changes the evidence source, calculation, institution, market convention, risk exposure, or decision being made.

What This Branch Covers

AreaUse it for
Adjustable PegAn Adjustable Peg is an exchange rate system where countries stabilize their exchange rates around par values that they retain the right to change.
Dirty FloatingDirty floating is managed floating in which authorities intervene while still allowing market forces to influence the exchange rate.
Macroeconomic TrilemmaThe macroeconomic trilemma says a country cannot simultaneously maintain a fixed exchange rate, free capital mobility, and independent monetary policy.
Target ZoneA target zone is an exchange-rate band authorities defend or guide through intervention, policy settings, or credibility commitments.

What to Check

  • Currency pair or currency basket.
  • Nominal, real, effective, fixed, floating, or controlled measure.
  • Base period, inflation index, or weighting method.
  • Central-bank, capital-control, or convertibility rule.
  • Cash-flow, valuation, hedge, or country-risk exposure affected.

Common Mistakes

  • Comparing nominal and real exchange rates as if they were the same measure.
  • Assuming a peg is risk-free or permanent.
  • Ignoring controls, settlement limits, and convertibility restrictions.
  • Reading a currency label without checking which country, market, or basket defines it.

Currency explanations are educational and do not recommend a trade, hedge, transfer, or country allocation.

In this section

Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.

Adjustable Peg

An Adjustable Peg is an exchange rate system where countries stabilize their exchange rates around par values that they retain the right to change.

Dirty Floating

Dirty floating is managed floating in which authorities intervene while still allowing market forces to influence the exchange rate.

Macroeconomic Trilemma

The macroeconomic trilemma says a country cannot simultaneously maintain a fixed exchange rate, free capital mobility, and independent monetary policy.

Target Zone

A target zone is an exchange-rate band authorities defend or guide through intervention, policy settings, or credibility commitments.

Revised on Sunday, June 21, 2026