The characteristics of implementing a floating exchange rate system are as follows:

The realization of international balance of payments equilibrium does not need to be at the expense of the domestic economy, does not affect the autonomy of the country's monetary policy, and is conducive to blocking foreign currency. The spread of inflation to the home country.

Introduction to the floating exchange rate system:

The floating exchange rate system refers to the exchange rate between one country's currency and another country's currency that fluctuates freely in the foreign exchange market based on supply and demand. The floating exchange rate system is relative to the "fixed exchange rate system". When supply exceeds demand, the exchange rate will float; when demand exceeds supply, the exchange rate will float.

On February 12, 1973, the United States announced that the U.S. dollar would depreciate by 10%. Subsequently, various currencies no longer maintained a fixed parity with the U.S. dollar and implemented floating exchange rates. Since then, the postwar fixed exchange rate system centered on the US dollar has become a relic of history.

The second revised agreement of the International Monetary Fund, which took effect on April 1, 1978, officially canceled the provisions on the fixed exchange rate system and replaced it with a managed floating exchange rate system. This announced the end of the postwar fixed exchange rate system and the implementation of a floating exchange rate system. Most countries in the world have floating exchange rates.

The types of floating exchange rates are: distinguished by whether the government intervenes, which can be divided into free floating and managed floating; distinguished by the way the exchange rate floats, it can be divided into independent floating and simultaneous floating.

Floating Exchange Rates System means that the domestic currency does not stipulate currency parity with foreign currencies, nor does it stipulate the fluctuation range of the exchange rate. The actual exchange rate is not restricted by parity, but changes with the supply and demand conditions of the foreign exchange market. and changing exchange rate regimes. In view of the different management methods and looseness of floating exchange rates in different countries, this system has many classifications.

According to whether the government intervenes, it can be divided into free floating and managed floating. Free floating: The government allows the supply and demand conditions in the foreign exchange market to determine the exchange rate of its own currency with foreign currencies without taking any measures. Managed float: The government takes limited intervention measures to guide the market exchange rate to float in a direction that is beneficial to its own interests.

According to the floating form, it can be divided into independent floating and joint floating. Depending on the currency being pegged, it can be divided into floating pegged to a single currency and floating pegged to a synthetic currency.