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

The single currency has deprived its members of any independent control over monetary policy or the exchange rate, so the burden of any necessary response to a recession falls more on fiscal policy.

ECONOMIST: Europe's single-currency rules

To regain control over its monetary policy, China needs a more flexible exchange rate.

ECONOMIST: Economics focus: A stitch in time saves nine | The

But the sooner the public finances are brought under control, the sooner the country can afford a more flexible exchange-rate policy without risking a return to inflation.

ECONOMIST: Latin America seeks shelter

They have surrendered control of the currency to an independent central bank that targets inflation, not the exchange rate.

ECONOMIST: Currency conundrums | The

And on the other, the exchange rate has been one of the prime reasons why British inflation has stayed so low since the committee was given control of interest rates in 1997.

ECONOMIST: The economy: What goes up | The