A government policy allowing a country's currency to fluctuate without direct intervention in the foreign-exchange markets. In practice, clean floating is rare as governments are frequently tempted to manage exchange rates by direct intervention by means of the official reserves, a policy sometimes called managed floating (see also managed currency). However, clean floating does not necessarily mean that there is no control of exchange rates, as they can still be influenced by the government's monetary policy. See also dirty float.
Subjects: Financial Institutions and Services.