The International Monetary Fund has published practical guidance for central banks on implementing bilateral and basket pegs, crawling pegs and exchange rate bands as credible nominal anchors for price stability. It advises selecting highly convertible anchor currencies with strong inflation records and relevant trade and financial links. Basket pegs should disclose their composition and weights, generally contain no more than five currencies and prioritize price stability, while commodity anchors are generally not advisable. For crawling pegs, the rate of crawl should support the desired medium-term inflation rate, be set prospectively and adjusted infrequently. The note cautions against real exchange rate pegs that match the crawl to inflation differentials, as these can undermine price stability. Bands should remain sufficiently narrow, typically in the low single-digit percentage range, while domestic interest rates should broadly reflect the anchor-country rate, the risk premium and any expected depreciation under a crawl. Foreign exchange intervention may accommodate temporary pressures, but sustained pegs require adequate reserves, countercyclical fiscal policy, sound financial supervision and clear communication.
2026-08-28International Monetary Fund
International Monetary Fund issues operational guidance on exchange rate pegs
The International Monetary Fund has issued guidance on operating fixed, basket and crawling exchange rate pegs and bands as nominal anchors for price stability. It recommends credible and convertible anchor currencies, transparent basket design, inflation-consistent crawl rates and sufficiently narrow bands, while advising against commodity and real exchange rate pegs. Interest rates, foreign exchange operations and broader macroeconomic policies should be aligned with maintaining the peg.