The Constitutions (Founding Laws) and Comparable Features of Select Currency Boards in the Former British Empire

The following analysis uses data from the founding laws, which will be referred to as constitutions, of currency boards in select territories of the former British Empire (New Zealand, India, Ceylon, Straits Settlements, West Africa, East Africa, Palestine, Southern Rhodesia, and the British Caribbean) to determine how currency board structures and laws have evolved over the years to adapt to changing political and economic conditions. As the pioneer in the implementation of the first currency boards (even before the term was popularized) that spanned over multiple continents and multiple decades during the 19th and 20th centuries, the British Empire is the ideal body to analyze with its wealth of collected information. From the select currency board constitutions used in this analysis, information on the introduction of stricter rules over the years shows that currency boards have grown more complex to respond to inherent risks and challenges of an increasingly globalized economy (widespread financial crises and unpredictable markets). Restrictions on the types of securities that the currency board can invest in with its reserves and the explicit statement of the procedures when the value of liabilities exceeds the value of assets became standard practice. Despite the additional 2 provisions in the constitutions, the foundation and structure of currency boards remained mostly unchanged because currency boards have always emphasized economic stability by maintaining adequate reserves and restricting the production of notes and coins in circulation. The constitutions show that currency boards are poised to adequately respond to changing political and economic conditions of the globalized economy, which helps explain the adoption of currency boards in countries around the world seeking economic stability long after the dissolution of the British Empire.