Calvo, Guillermo A.This note examines the pros and cons of flexible and fixed exchange rates in terms of a bear-bones model which, however, takes into account features that have played a prominent role in recent currency crises, namely, volatility of capital flows and the real exchange rate, currency substitution and financial fragility, and the Credit Channel.en-USflexible exhange ratesfixed exchange ratescurrency crisesvolatilitycapital flowsreal exchange ratecurrency substitutionfinancial fragilitycredit channelArticle