The Importance of Discipline in the Economy

When you don't have an exchange rate, you need to impose discipline on the economy in some other way. The whole central bank has a different function than in the economy. If the state loses the ability to interrogate its own spending because of fiscal incontinence and the leakages we were talking about, what you get is that the public sector on moors the economy from its anti-inflationary bias. And so the economic theory tells us without an exchange rate,. you've got to be really, really on the ball.