The initial goal of the paper was to evaluate the working of the MAR system which was adopted in Korea in March 1990. However, since the system is only two years and several months old, no credible macroeconomic empirical test could be accomplished due to the lack of data. It was also necessary to review the history of Korea's foreign exchange rate system in order to shed light on the background and rationale of the MAR system. Therefore, instead of only investigating the functioning of the MAR system, this paper reviewed the whole history of the foreign exchange rate system and evaluated the MCBP system which was adopted for the period of March 1980 through February 1990. This system is important in understanding the MAR system since it was the first effort made in Korea in the direction of a market-oriented foreign exchange rate system. This paper also reviewed Taiwan's central exchange rate system since it was the system that Korea followed in the name of the MAR system.

I. Introduction

II. Goals and Tsrgets of the Foreign Exchange Rate Policy

III. Review of the Foreign Exchange Rate System in Korea

IV. The Multiple Currency Basket Peg System
IV-1. How It Worked
IV-2. Evaluation of the System
IV-3. Problems of the System

V. The Market Average Rate System
V-1. Introduction
V-2. Evaluation of the System
V-3. Problems with the Current System
V-4. Policy Reconmmendations

VI. The Central Exchange Rate System of Taiwan
VI-1. Introduction
VI-2. Problems of the System
VI-3. Comparison with Korean Experience

VII. Transition to the Freely Floating Exchange Rate System
VII-1. Experience of the Industrialized Countries
VII-2. Requirements for Successful Operation of the System

VIII. Summary and Conclusions