I RECENTLY

noted

that the evolution of emerging-market exchange rate regimes since the crises of the 1990s helped explain their relative robustness in the face of recent market turmoil. But I said that fewer economies were using hard currency pegs, which isn't exactly right, as a new chart from the IMF's

World Economic Outlook

makes clear. In fact, the number of economies using hard-currency pegs has actually gone up a bit over time. And free floating, which peaked right before the global recession, has lately gone out of fashion. But the big shifts, as it turns out, are in the hybrid exchange-rate regimes. In particular, there has been a broad move away from crawling pegs and toward managed floats. That represents a net move toward more liberalised exchange rates, but it's not the same thing as a general move to floating.

The attraction of a managed float relative to a crawling peg is clear. The crawling peg is neither fish nor fowl; it provides enough certainty for markets to build up vulnerability to a devaluation, while at the same time undermining the credibility of the peg by acknowledging that it may move amid big capital flows. A managed float, by contrast, generally frees the government from the need to defend any particular level of the currency. And pushing against appreciation enables the accumulation of foreign-exchange reserves, which can then be deployed to ease depreciation when market sentiment shifts.

Of course, and as the IMF points out, a free floating regime has been associated with the lowest probability of crisis over the past generation. But for emerging economies unwilling to take that plunge (which occasionally means taking that plunge) the managed float looks a good bit more attractive than other regime options.