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Author: Kai Stukenbrock
Publisher: Peter Lang Pub Incorporated
ISBN: 9783631520314
Category : Business & Economics
Languages : en
Pages : 237
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Book Description
The 1990s saw a revival of the currency board system, and proponents have advocated it as an easy-to-set-up exchange rate arrangement providing effective stabilization of the economy. However, the experience of Argentina has highlighted the risks of having a currency board. This study presents both the potential benefits, as well as the risks, of having a currency board by examining the stability of the currency board arrangement and identifying factors affecting the stability. The analysis is based on second-generation currency crisis models, extended to incorporate currency-board specific features and to account for particular aspects often found in currency-board economies.
Author: Mr.Atish R. Ghosh
Publisher: International Monetary Fund
ISBN: 1451927959
Category : Business & Economics
Languages : en
Pages : 23
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Book Description
The growing integration of world capital markets has made it fashionable to argue that only extreme exchange rate regimes are sustainable. Short of adopting a common currency, currency board arrangements represent the most extreme form of exchange rate peg. This paper compares the macroeconomic performance of countries with currency boards to those with other forms of pegged exchange rate regime. Currency boards are indeed associated with better inflation performance, even allowing for potential endogeneity of the choice of regime. Perhaps more surprisingly, this better inflation performance is accompanied by higher output growth.
Author: Raffaele Nostitz
Publisher: GRIN Verlag
ISBN: 3640334965
Category : Business & Economics
Languages : en
Pages : 29
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Book Description
Essay from the year 2009 in the subject Economics - Monetary theory and policy, grade: 2,3, Free University of Berlin, course: International Monetary Relations, language: English, abstract: "Stability might not be everything, but without stability everything is nothing." This quote of the former federal minister for economics and finance in Germany leads directly to the reason for the installation of a currency board. Stability of the monetary system means the achievement of three objectives: a fixed exchange rate system to alleviate the calculations for international trade, free capital movement to ensure the convertibility of currencies, and a monetary policy that can address independently domestic concerns like inflation or unemployment. Unfortunately, it is impossible to achieve all three objectives at the same time. This goal conflict is often called "triangle of impossibility" or "impossible trinity" in the international economics literature. If a country's decision is to fix the exchange rate to a selected currency, a currency board would be one of the possible instruments. In this essay, first there will be taken a short look at how a currency board works and what the political meanings and consequences are. Afterwards, a short analysis of the currency board-like system that has been installed in Argentina from 1991 to 2002 leads to the drawbacks and opportunities of currency boards.
Author: Guillermo Perry
Publisher: World Bank Publications
ISBN: 9780821338643
Category : Business & Economics
Languages : en
Pages : 38
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Book Description
Currency boards are institutions that replace central banks and ensure that a country's currency can be purchased at a given price (or exchange rate) upon demand, thus imposing a fixed exchange rate on international transactions. These systems have their advantages--they prohibit the use of liberal monetary policies that lead to high inflation--but they can also limit the ability of an economy to react to changes in international economic conditions if foreign currency reserves are depleted. Such threats to the stability of the financial sector may stem from economic events that originate outside the national economy (external shocks), such as the fallout from the Mexican peso devaluation in late 1994. This paper presents the proceedings of a World Bank roundtable discussion held in 1996 to examine the impact of external shocks and to address the challenges countries face when operating under a currency-board system of currency exchange, with a particular emphasis on how certain costs can be minimized while maximizing the gains. Special attention is given to the currency-board systems in Argentina and Hong Kong.
Author: John Williamson
Publisher: Peterson Institute for International Economics
ISBN:
Category : Business & Economics
Languages : en
Pages : 90
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Book Description
Explains what a currency board is and how it differs from a central bank. Examines the advantages and disadvantages of each type of arrangement.
Author: Nissan Liviatan
Publisher: World Bank Publications
ISBN: 9780821325216
Category : Business & Economics
Languages : en
Pages : 132
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Book Description
Eighteen well-known policymakers and economists discuss the rising use of currency substitution in Latin America. They examine the effects of currency boards on substitute currencies and on national stabilization programs. Latin American countries including Argentina, Bolivia, Peru, and Uruguay increasingly use dollars as a substitute for domestic currency. The experts debate whether the region should encourage or resist this trend. Topics include the effects of substitution on inflation, liquidity, and exchange rates. The discussions on Argentina, Peru, and Brazil focus on the ways in which currency boards have affected stabilization in these countries. They consider whether such boards can strengthen fiscal discipline and speed economic adjustment. A currency board issues money that is converted into a foreign reserve currency at a fixed exchange rate. This independent institution takes over the central bank's role as the sole issuer of base money. It also manages the exchange rate to keep the currency stable and convertible.
Author: Steve H. Hanke
Publisher:
ISBN:
Category : Currency boards
Languages : en
Pages : 140
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Book Description
Author: Holger C. Wolf
Publisher: MIT Press
ISBN: 0262232650
Category : Business & Economics
Languages : en
Pages : 279
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Book Description
Employing economic theory, cross-country empirical comparison and case studies, this work analyses the effect of currency boards on inflation, output growth and macroeconomic performance. The case studies come from Argentina, Estonia Lithuania, Bulgaria and Bosnia and Herzegovina.
Author: Mr.Charles Enoch
Publisher: International Monetary Fund
ISBN: 9781557756688
Category : Business & Economics
Languages : en
Pages : 68
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Book Description
This paper provides a comprehensive analysis of the attractions and disadvantages of currency board arrangements in their various institutional configurations. It asks what defines a currency board arrangement, what are their strengths and weaknesses, and what constraints they place on macroeconomic policies. It also reviews country experiences with these arrangements.
Author: Kai Stukenbrock
Publisher: Peter Lang Pub Incorporated
ISBN: 9783631520314
Category : Business & Economics
Languages : en
Pages : 237
Get Book Here
Book Description
The 1990s saw a revival of the currency board system, and proponents have advocated it as an easy-to-set-up exchange rate arrangement providing effective stabilization of the economy. However, the experience of Argentina has highlighted the risks of having a currency board. This study presents both the potential benefits, as well as the risks, of having a currency board by examining the stability of the currency board arrangement and identifying factors affecting the stability. The analysis is based on second-generation currency crisis models, extended to incorporate currency-board specific features and to account for particular aspects often found in currency-board economies.
Author: Brian Lawrence
Publisher: Clanrye International
ISBN: 9781647266370
Category : Business & Economics
Languages : en
Pages : 0
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Book Description
A currency board is a country's monetary authority that is tasked with sustaining a fixed exchange rate along with a foreign currency. The control of the money supply and exchange rate is delegated to a monetary authority by a currency board. This monetary authority then makes decisions concerning the currency valuation of a country. The currency board permits limitless exchange of the domestic currency with foreign currency to the agents. It provides stable exchange rates that facilitate investment and trade. Currency boards are also well-known for controlling inflation. However, there are certain risks associated with the currency boards. In a crisis, the investors can quickly exchange their domestic currency for foreign currency, leading to an increase in the interest rates. This can severely impact the reserve and liquidity requirements of the banks. This book analyses the risks and benefits associated with currency boards. It is appropriate for students seeking detailed information in this area of study as well as for experts.
