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Monetary Systems in Developing Countries: An Unorthodox View


  • Cordeiro, Jose Luis


This paper analyzes some recent theoretical and practical evidence in terms of economic results of different exchange rate systems. It begins with a historical review and a summary of fixed versus flexible exchange rate systems. Then it compares the experiences of recent currency unions, mostly unilateral, and their relative economic performance during the past currency crises in Latin America, East Asia and Eastern Europe. A set of issues is discussed in order to weigh the overall costs and benefits for several economies. These issues include exchange rates, GDP performance, inflation rates and foreign reserves. The case of Argentina is also considered separately, comparing mostly seigniorage costs and interest-rate savings. The benefits and costs of the producers (central banks/governments) and the consumers (citizens) of money are discussed separately. Free banking is also considered in a fast-changing world where there will probably be fewer but better currencies. Not just the euro is a reality now, but maybe the "amero" and the "worldo" or the "mondo" very soon.

Suggested Citation

  • Cordeiro, Jose Luis, 2008. "Monetary Systems in Developing Countries: An Unorthodox View," IDE Discussion Papers 154, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper154

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    References listed on IDEAS

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    More about this item


    Exchange rates; Monetary policy; Monetary union; Dollarization; Euroization; Developing countries; Foreign exchange; Finance; International finance; Money; 為替レート; 金融政策; 通貨同盟; ドル化; ユーロ化; 発展途上国; 外国為替; 金融; 国際金融; 貨幣;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F30 - International Economics - - International Finance - - - General

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