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Currency Boards

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  • Steve H. Hanke

    (Johns Hopkins University in Baltimore)

Abstract

In contrast to central banks, currency boards are rule-bound monetary institutions without discretionary monetary policies. Currency boards first appeared in the mid-nineteenth century, were widespread prior to World War II, were replaced by central banks after the war, and have made something of a resurgence in the 1990s. This article discusses the distinguishing features of currency boards and central banks. Data that compare the performance of currency boards to that of central banks are presented. The arguments against currency boards are itemized and evaluated. The article concludes that the opposition to currency boards ignores the empirical evidence and is, at best, half baked. In developing countries, currency boards are superior to central banks. By applying a remediableness criterion, the article concludes that there are more than sixty countries that should replace their central banks with currency boards.

Suggested Citation

  • Steve H. Hanke, 2002. "Currency Boards," The ANNALS of the American Academy of Political and Social Science, , vol. 579(1), pages 87-105, January.
    • Handle: RePEc:sae:anname:v:579:y:2002:i:1:p:87-105
    DOI: 10.1177/000271620257900107
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    References listed on IDEAS

    as
    1. Mr. Atish R. Ghosh, 1998. "Currency Boards: The Ultimate Fix?," IMF Working Papers 1998/008, International Monetary Fund.
    2. Klamer, Arjo, 1989. "An Accountant among Economists: Conservations with Sir John R. Hicks," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 167-180, Fall.
    3. Christopher L. Culp & Steve H. Hanke & Merton H. Miller, 1999. "The Case For An Indonesian Currency Board," Journal of Applied Corporate Finance, Morgan Stanley, vol. 11(4), pages 57-65, January.
    4. Mr. Edward J Frydl, 1999. "The Length and Cost of Banking Crises," IMF Working Papers 1999/030, International Monetary Fund.
    5. John Williamson, 1995. "What Role of Currency Boards?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa40, October.
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    Cited by:

    1. Little, Cameron, 2017. "The Tongan Board of Commissioners of Currency (1935-1989): Not an Orthodox Currency Board," Studies in Applied Economics 89, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.

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