1. Helania is a small country in Eastern Europe with a hard peg currency system that uses the euro. The country is undergoing a string of financial deregulations and is considering adopting a new FX system. As such, the Helanian government is considering creating its own currency, the Helanian Hela. To do so, the government is considering two system options: (1) a conventional-pegged arrangement to the euro; or (2) a free-floating Hela.

a.Discuss how these new systems would compare to their current arrangement (min. 200 words)

b. Identify the main disadvantages to adopting either system. (min. 200 words)