1. 1 The context What factors determine a country's exchange rate regime? Since the col lapse of the Bretton Woods system of fixed exchange rates in 1973, eco nomists have been increasingly interested in answering this question. Ana lysts focused primarily on the possible influence of optimum currency area (OCA) criteria, such as a country's size, openness to trade, or factor mobi lity. More recent approaches emphasized the nature and the sources of shocks to which an economy is exposed or explicitly took imperfections on financial markets into account. However, despite a large body of work,...