ELI5: How are fixed exchange rates good and bad for a country's economy?

It's bad if you have the weaker/smaller economy, because now your fortunes depend on the actions of someone you have little to no control over.

It's good if you have the weaker/smaller economy, because now you're a secure market for the stronger/larger economy and can profit from it.

It's overall ok, because it has a similar effect to sharing the same currency but if things really go down south you can always pull out, so it's a sensible mid-of-the-way measure if you're dependant or relying on a certain market to make your fortunes.

Real ELI5: If you want to make someone that can help you a lot really trust you, support them in what they're doing. However don't commit to them completely and forever because if they can help you a lot, they can also hurt you a lot.

/r/explainlikeimfive Thread