Currency crises might also occur because pegging the exchange rate requires governments to use monetary policy in order to maintain the currency's value.

ECONOMIST: Disaster has spawned a new theory of financial crises

Even so, China could still introduce some flexibility into its exchange rate, and so regain control of monetary policy, by adopting a wider band or by pegging to a currency basket rather than just to the dollar.

ECONOMIST: It is time for China to unshackle the price of money