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Currency board or central bank? Lessons from the Irish pound’s link with sterling, 1928-79

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  • P. HONOHAN

    (The Economic and Social Research Institute)

Abstract

The resurgence of interest in currency boards prompts reconsideration of one of the Irish experience. The authors evaluate the institutional arrangements which underpinned the Irish pound for a half-century. While the regime did have a credibility which led to low interest rates and a degree of price stability, its resilience was partly due to the large additional foreign reserves held by the private banking system and to the fact that the sterling proved not to be a very strong currency. However, an attempt in 1955 to evade the interest rate discipline of the regime was quickly punished, with far-reaching policy consequences.

Suggested Citation

  • P. Honohan, 1997. "Currency board or central bank? Lessons from the Irish pound’s link with sterling, 1928-79," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 50(200), pages 39-67.
  • Handle: RePEc:psl:bnlaqr:1997:13
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10570/10454
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    References listed on IDEAS

    as
    1. Honohan, Patrick & Conroy, Charles, 1994. "Irish Interest Rate Fluctuations in The European Monetary System," Research Series, Economic and Social Research Institute (ESRI), number GRS165.
    2. Honohan, Patrick, 1992. "The Link between Irish and UK Unemployment," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 1992(1-Spring).
    3. Murphy, Antoin E, 1978. "Money in an Economy without Banks: The Case of Ireland," The Manchester School of Economic & Social Studies, University of Manchester, vol. 46(1), pages 41-50, March.
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    5. Liviatan, N., 1993. "Proceedings of a Conference on Currency Substitution and currency Boards," World Bank - Discussion Papers 207, World Bank.
    6. Kent Osband & Delano Villanueva, 1993. "Independent Currency Authorities: An Analytic Primer," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 202-216, March.
    7. John Curtis & John FitzGerald, 1994. "Convergence in an Open Labour Market," Papers WP045, Economic and Social Research Institute (ESRI).
    8. Bradley, John & FitzGerald, John & Hurley, David & O'Sullivan, Liam & Storey, Andrew, 1989. "HERMES-IRELAND A Model of the Irish Economy: Structure and Performance," Research Series, Economic and Social Research Institute (ESRI), number BMI52.
    9. Schwartz, Anna J., 1993. "Currency boards: their past, present, and possible future role," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 147-187, December.
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    Cited by:

    1. Wang, Charlie, 2017. "History, Policies and Financial Statements of the Irish Currency Commission and the Central Bank of Ireland (1927 – 1979)," Studies in Applied Economics 79, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.

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    More about this item

    Keywords

    Financial systems and central banks;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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