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On dollarization and currency boards: Error and deception

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  • Steve Hanke

Abstract

A diagnosis of the laws and balance sheets of the monetary authorities in Argentina, Bosnia, Bulgaria, Estonia, Hong Kong and Lithuania is presented. With the exception of Bosnia, all employ active monetary policies and engage in sterilization. Accordingly, they are not currency boards. The methods used to dismantle the Argentine system in 2001, prior to its eventual abandonment, are presented. An evaluation of the Hong Kong system (1997-1998) suggests that its so-called currency board was not a party to counter-speculation in the stock market. Evidence is presented to show how deception was employed by the US and the IMF during the Indonesian currency board debate (1998) as a means to engineer a political regime change.

Suggested Citation

  • Steve Hanke, 2002. "On dollarization and currency boards: Error and deception," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(4), pages 203-222.
  • Handle: RePEc:taf:jpolrf:v:5:y:2002:i:4:p:203-222 DOI: 10.1080/1384128032000096814
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    References listed on IDEAS

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    1. 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.
    2. Corrinne Ho, 2002. "A survey of the institutional and operational aspects of modern-day currency boards," BIS Working Papers 110, Bank for International Settlements.
    3. Stanley Fischer, 2002. "Financial Crises and Reform of the International Financial System," NBER Working Papers 9297, National Bureau of Economic Research, Inc.
    4. Walter B. Wriston, 1998. "Dumb Networks and Smart Capital," Cato Journal, Cato Journal, Cato Institute.
    5. Carlos E. Zarazaga, 1995. "Can currency boards prevent devaluations and financial meltdowns?," Southwest Economy, Federal Reserve Bank of Dallas, issue Jul, pages 6-9.
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    Citations

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    Cited by:

    1. Alain Raybaut & Dominique Torre, 2004. "Unions monétaires, caisses d'émission et dollarisation : les fondements analytiques des systèmes de change « ultra-fixes »," Revue d'Économie Financière, Programme National Persée, vol. 75(2), pages 37-54.
    2. Makochekanwa, Albert, 2009. "Zimbabwe’s Currency Crisis: Which Currency To Adopt In The Aftermath Of The Multi-Currency Regime?," MPRA Paper 22463, University Library of Munich, Germany.
    3. Bennett T. McCallum, 2014. "Monetary Policy in a Very Open Economy: Some Major Analytical Issues," Pacific Economic Review, Wiley Blackwell, vol. 19(1), pages 27-60, February.
    4. Neven T. Valev & John A. Carlson, 2007. "Beliefs about Exchange-Rate Stability: Survey Evidence from the Currency Board in Bulgaria," Journal of Economic Policy Reform, Taylor and Francis Journals, pages 111-121.
    5. Nikolay Nenovsky, 2010. "Monetary Regimes In Post-Communist Countries Some Long-Term Reflections," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 57, pages 217-234, november.
    6. Popov, Vladimir, 2010. "To devalue or not to devalue? How East European countries responded to the outflow of capital in 1997-99 and in 2008-09," MPRA Paper 28112, University Library of Munich, Germany.
    7. Frank R. Gunter, 2013. "The Political Economy of Iraq," Books, Edward Elgar Publishing, number 14293, September.
    8. Jean-Baptiste Desquilbet & Nikolay Nenovsky, 2004. "Credibility and Adjustment : Gold Standards versus Currency Boards," CAE Working Papers 11, Aix-Marseille Université, CERGAM.
    9. Ross H. McLeod, 2014. "The ill-fated currency board proposal for Indonesia," Departmental Working Papers 2014-02, The Australian National University, Arndt-Corden Department of Economics.
    10. Igor Ljubaj & Ana Martinis & Marko Mrkalj, 2010. "Capital Inflows and Efficiency of Sterilisation – Estimation of Sterilisation and Offset Coefficients," Working Papers 24, The Croatian National Bank, Croatia.
    11. Dorota Zuchowska, 2015. "Accession To The Eurozone As Lithuania’S Exit Strategy From The Currency Board System," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, pages 27-43.
    12. 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.
    13. Jérôme Blanc, 2014. ""Argentina o dolarización", ou quand la monnaie revient à la souveraineté," Post-Print halshs-01016336, HAL.
    14. Tas, Bedri Kamil Onur & Togay, Selahattin, 2010. "Optimal monetary policy regime for oil producing developing economies: Implications for post-war Iraq," Economic Modelling, Elsevier, vol. 27(5), pages 1324-1336, September.
    15. Eva Paus & Nola Reinhardt & Michael Robinson, 2003. "Trade Liberalization and Productivity Growth in Latin American Manufacturing, 1970-98," Journal of Economic Policy Reform, Taylor & Francis Journals, pages 1-15.
    16. Kurt Schuler, 2005. "Ignorance and Influence: U.S. Economists on Argentina's Depression of 1998–2002," Econ Journal Watch, Econ Journal Watch, pages 234-278.
    17. Moustapha AMAN & Ismeal MAHAMOUD & Nikolay NENOVSKY, 2013. "Le système informel de transferts de fonds et le mécanisme automatique du Currency Board : complémentarité ou antagonisme ? Le cas des transferts des hawalas à Djibouti," LEO Working Papers / DR LEO 2249, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    18. Dorota Zuchowska, 2015. "Accession to the Eurozone as Lithuania’s exit strategy from the currency board system," Working Papers 10/2015, Institute of Economic Research, revised Feb 2015.

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