The maintenance of a competitive exchange rate is important for an emerging market economy. At the same time, certain regime types have become harder to sustain under the current global economy, reflecting a move towards more market-friendly approaches. This paper critically assesses whether an alternative exchange rate regime � a Currency Transactions Tax (CTT) � can feasibly be implemented in emerging market economies, using Latin America as a test region. This paper finds that the international system creates limits on regime choices and a CTT is faced with challenges that mitigate its feasibility. This paper concludes with the notion that managed floating is a more sustainable regime given the limits to governance that the region faces but there also exists a possibility of improved policy space as trends in the global economy continue.
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