Why China’s policymakers are relaxed about a falling yuan

, a Nobel-prizewinning economist, wrote that it was “fairly likely” the world would soon shift away from freely floating exchange rates. Governments would instead adopt a system of “broad target zones”, promising to stop their currencies wandering too far above or below a fixed exchange rate.He was wrong—but a version of this future can be seen in China. Each morning its central bank sets an exchange rate for the yuan known as the “fix”. China’s currency can float 2% above or below this rate each day. The zone is narrower than Mr Krugman expected and its mid-point moves each morning in discrete steps. Yet it is similar enough that economists at Hamburg University have called it a staircase-shaped “moving Krugman band system”.