IDEAS home Printed from
   My bibliography  Save this article

Currency Board Arrangement and Transition: The Issues, Controversies and the Experience of Bosnia


  • Basic, S.


In the last decade there has been considerable discussion on what exchange rate policies shall be pursued by developing countries as well as countries in transition as mean of successful transformation and effective mechanism to spur private sector growth and promote stability. the central to this, rather broad and growing debate, has been the role of fixed exchange rates, and the currency board arrangements (cba) in particular.this paper provides a comprehensive analysis of the attractions and disadvantages of such arrangements principally drawing on the experience of bosnia and herzegovina (bih). it assesses merits and costs related to this arrangement, primarily looking at the rigidities and constraints the regime imposes on macroeconomic policies, and the subsequent impact on growth and development. finally, the paper elaborates if and under which conditions, the weaknesses associated with the regime are off set with its repeatedly assigned advantages of i.e. macroeconomic stability, low inflation, increased confidence and established credibility as well as reduced “costs” to business transactions and investments. the paper concludes that bosnian currency board was viable temporary solution and that serious consideration shall be given to exiting the regime. the paper is thought to provide useful insights to policy makers and contribute to the overall monetary and exchange rate debate.

Suggested Citation

  • Basic, S., 2005. "Currency Board Arrangement and Transition: The Issues, Controversies and the Experience of Bosnia," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 2(2), pages 47-64.
  • Handle: RePEc:eaa:ijaeqs:v:2:y2005:i:2_5

    Download full text from publisher

    File URL:
    Download Restriction: No

    References listed on IDEAS

    1. Panicos O. Demetriades & Kul B. Luintel, 1997. "The Direct Costs Of Financial Repression: Evidence From India," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 311-320, May.
    2. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    3. Robin L. Lumsdaine & David H. Papell, 1997. "Multiple Trend Breaks And The Unit-Root Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 212-218, May.
    4. Perron, Pierre, 1997. "Further evidence on breaking trend functions in macroeconomic variables," Journal of Econometrics, Elsevier, vol. 80(2), pages 355-385, October.
    5. Demetriades, Panicos O & Luintel, Kul B, 1996. "Banking Sector Policies and Financial Development in Nepal," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 355-372, May.
    6. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    7. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
    Full references (including those not matched with items on IDEAS)


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eaa:ijaeqs:v:2:y2005:i:2_5. 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: (M. Carmen Guisan). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.