Advanced Search
MyIDEAS: Login to save this article or follow this journal

Comparing Currency Board Automatic Mechanism in Bulgaria, Estonia and Lithuania


Author Info

  • Nenovsky Nikolay

    (University of National and World Economy)

  • Hristov Kalin

    (University of National and World Economy)

  • Mihaylov Mihail

    (Bulgarian National Bank, Research Department)


The paper presents a cross-country analysis of the second generation of currency boards (CB) introduced in three East European countries: Bulgaria, Estonia and Lithuania. We focus on their institutional, legal and political characteristics which are closely associated with the operation of the automatic mechanism (AM) of currency boards. The presence of an automatic mechanism within the framework of the currency board is often cited as a major counterpoint to the “discretion and subjectivity” of a classical central bank. Since there is no precise definition of automatic mechanisms in the literature, we define it as: “the presence of a positive cointegration relationship between the balance of payments and the reserve money (or money supply) and absence of discretionary variables in the model.” When discretionary variables are present in the model in one form or another, we may speak of a “mechanism for adjustment through discretion – conscious or unconscious.” Within the framework of the second generation of currency boards, we reduce the channel of discretion to the presence of atypical balance sheet items and employment of a number of monetary policy instruments. We seek in this article to compare currency board automatic mechanism in Bulgaria, Estonia and Lithuania.L’article procède d’une analyse transversale par pays de la deuxième génération des “bureaux d’émission” (currency boards) introduits dans trois pays de l’Europe de l’Est. L’accent est mis sur les caractéristiques institutionnelles, juridiques et politiques qui sont étroitement associées à l’opération du mécanisme automatique (MA) des bureaux d’émission. L’existence d’un mécanisme automatique dans la structure d’un bureau d’émission est souvent mise en avant comme l’argument majeur à l’encontre de la “discrétion” et la “subjectivité” d’une banque centrale classique. Parce qu’il n’existe aucune définition précise du mécanisme automatique dans la littérature, nous la définissons comme “la présence d’une relation positive de cointégration entre la balance des paiements et les réserves monétaires (ou l’offre de monnaie) et l’absence de variables discrétionna- ires dans le modèle”. Quand des variables discrétionnaires sont présentes dans le modèle sous une forme ou une autre, nous pouvons parler d’un “mécanisme d’ajustement discrétionnaire – conscient ou inconscient”. Au sein de la structure de la deuxième génération des bureaux d’émission, la discrétion se réduit à la présence de postes atypiques dans le bilan et à l’emploi d’un certain nombre d’instruments de politique monétaire.L’article propose une comparaison du mécanisme automatique en Bulgarie, Estonie et Lithuanie.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by De Gruyter in its journal Journal des Economistes et des Etudes Humaines.

Volume (Year): 11 (2001)
Issue (Month): 4 (December)
Pages: 1-44

as in new window
Handle: RePEc:bpj:jeehcn:v:11:y:2001:i:4:n:2

Contact details of provider:
Web page:

Order Information:

Related research



No references listed on IDEAS
You can help add them by filling out this form.


Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Alexandru Minea & Christophe Rault, 2011. "External Monetary Shocks and Monetary Integration: Evidence from the Bulgarian Currency Board," CESifo Working Paper Series 3409, CESifo Group Munich.
  2. Jean-Baptiste Desquilbet & Nikolay Nenovsky, 2005. "Confiance et ajustement dans les régimes d'étalon-or et de caisse d'émission," Post-Print halshs-00008096, HAL.
  3. Moustapha Aman & Nikolay Nenovsky & Ismeal Mahamoud, 2014. "Le système informel de transferts de fonds et le mécanisme automatique du Currency Board : Complémentarité ou antagonisme ?," Working Papers halshs-01012133, HAL.
  4. Jean Baptiste Desquilbet & Nikolay Nenovsky, 2004. "Credibility and adjustment: gold standards versus currency boards," William Davidson Institute Working Papers Series 2004-692, William Davidson Institute at the University of Michigan.
  5. Petar Chobanov & Nikolay Nenovsky, 2004. "Money Market Liquidity under Currency Board – Empirical Investigations for Bulgaria," William Davidson Institute Working Papers Series 2004-693, William Davidson Institute at the University of Michigan.
  6. Dalia Grigonyté, 2003. "Impact of Currency Boards on Fiscal Policy in Central and Eastern European Countries," Economic Change and Restructuring, Springer, vol. 36(2), pages 111-133, June.
  7. Nikolay Nenovsky, 2010. "The Bulgarian Economic Thought since 1989: A Personal View," ICER Working Papers 21-2010, ICER - International Centre for Economic Research.
  8. Jean-François Ponsot & Jérôme Blanc, 2004. "Crédibilité et currency board : le cas lituanien," Revue d'Économie Financière, Programme National Persée, vol. 75(2), pages 113-127.
  9. Nikolay Nenovsky & Evgeni Peev & Todor Yalamov, 2003. "Banks-Firms Nexus under the Currency Board: Empirical Evidence from Bulgaria," William Davidson Institute Working Papers Series 555, William Davidson Institute at the University of Michigan.


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:bpj:jeehcn:v:11:y:2001:i:4:n:2. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.