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An Institutional Framework for Comparing Emerging Market Currency Boards


  • Marie-Therese Camilleri


This paper offers an in-depth review of the institutional arrangements underlying existing currency boards (CBAs) in Argentina (until 2001), Eastern Europe, and Asia. An index of precommitment is derived from an analysis of legislative frameworks and monetary policy operations. The index covers features associated with monetary and exchange rate credibility such as: (i) clarity of legal basis, (ii) quality of reserve coverage, (iii) coverage of monetary aggregates, (iv) claims on reserves, (v) operational autonomy, (vi) transparency and accountability, and (vii) escape clauses. The paper concludes with a discussion of flexibility and credibility trade-offs and exit issues.

Suggested Citation

  • Marie-Therese Camilleri, 2004. "An Institutional Framework for Comparing Emerging Market Currency Boards," IMF Working Papers 04/180, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:04/180

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    References listed on IDEAS

    1. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
    2. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
    3. Alex Cukierman, 1992. "Central Bank Strategy, Credibility, and Independence: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031981, January.
    4. K. Hristov & Nikolay Nenovsky, 1999. "Monetary Policy under the Currency Board: the case of Bulgaria," Post-Print halshs-00260107, HAL.
    5. Krugman, Paul, 1979. "A Model of Balance-of-Payments Crises," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 11(3), pages 311-325, August.
    6. Klein, Michael W. & Marion, Nancy P., 1997. "Explaining the duration of exchange-rate pegs," Journal of Development Economics, Elsevier, vol. 54(2), pages 387-404, December.
    7. Walsh, Carl E, 1999. "Announcements, Inflation Targeting and Central Bank Incentives," Economica, London School of Economics and Political Science, vol. 66(262), pages 255-269, May.
    8. Alan S. Blinder, 2000. "Central-Bank Credibility: Why Do We Care? How Do We Build It?," American Economic Review, American Economic Association, vol. 90(5), pages 1421-1431, December.
    9. Alain Ize & Arto Kovanen & Timo Henckel, 1999. "Central Banking Without Central Bank Money," IMF Working Papers 99/92, International Monetary Fund.
    10. S. E Oppers, 2000. "Dual Currency Boards; A Proposal for Currency Stability," IMF Working Papers 00/199, International Monetary Fund.
    11. repec:fth:harver:1496 is not listed on IDEAS
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    Cited by:

    1. Nikolai Nenovski, 2006. "Monetary Convergence En-route to Euro-Zone: Theoretical Problems," Godishnik na UNSS, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 171-197, May.
    2. Holger Wolf, 2016. "Currency boards as a path towards the Eurozone: lessons from the Baltics," International Economics and Economic Policy, Springer, vol. 13(1), pages 45-57, January.
    3. Nikolai Nenovski, 2006. "Monetary Convergence En-route to Euro-Zone: Theoretical Problems," Nauchni trudove, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 171-197, May.
    4. Pablo F Druck & Mario Dehesa, 2008. "The Eastern Caribbean Central Bank; Challenges to an Effective Lender of Last Resort," IMF Working Papers 08/214, International Monetary Fund.


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