Advantages of floating exchange rate system over fixed exchange rate: 1) It has the function of spontaneously adjusting the balance of payments; 2) help to curb large-scale foreign exchange speculation; 3) It frees the government from the constraint of fixed exchange rate system on economic policy autonomy; 4) stronger vitality to adapt to the world economic environment; 5) It is helpful to improve the efficiency of resource allocation.

Defects of floating exchange rate system: 1) Exchange rate fluctuations bring foreign exchange risks to international trade and international financial activities, which will hinder its smooth development to some extent. 2) It weakens the monetary discipline under the fixed exchange rate system and encourages the inflationary tendency of monetary policy, so the government does not need to curb inflation to fulfill its obligation of maintaining a fixed exchange rate. 3) It will fuel the financial bubble, that is, the price of financial assets is higher than its actual value. For example, the rise of American stock price will stimulate the inflow of foreign capital, thus increasing the exchange rate of the US dollar; The rise of the US dollar exchange rate will further attract foreign capital inflows and help the stock price climb. 4) Under the floating exchange rate system, currencies pegged to the exchange rate system are particularly vulnerable to the impact of international speculative capital.