Currency substitution can impact exchange rate stability. When currency substitution is high, exchange rates become more volatile. However, if central banks act to maximize profits, currency substitution can actually enhance exchange rate stability. The researchers found that changes in relative money supplies can immediately affect national price levels and exchange rates. Anticipated depreciation of one currency can lead to a decrease in its demand and an increase in demand for the other currency. The degree of exchange rate change depends on the level of currency substitution.