Currency Regimes – Independently Floating Rates

The exchange rate is left to market determination and the monetary authority is able to exercise independent monetary policy aimed at achieving such objectives as price stability and full employment.

The central bank also has latitude to act as a lender of last resort to troubled financial institutions, if necessary.

The most widely traded currencies in foreign exchange markets (the US dollar, yen, euro, UK pound, Swiss franc, and the Canadian and Australian dollars) are typically considered to be free floating, although subject to relatively infrequent intervention.