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The ill-fated currency board proposal for Indonesia

Author

Listed:
  • Ross McLeod

    (Arndt Corden Department of Economics, the Australian National University)

Abstract

In February 1998, President Soeharto’s chief economic advisor, Professor Steve Hanke, proposed a currency board as the means to extract Indonesia from the Asian Financial Crisis. President Soeharto embraced Hanke’s proposal and announced that he intended to implement it. The international, and eventually domestic, opposition was so vociferous that the currency board plan was aborted. Professor Ross McLeod’s diagnosis of the state of Indonesia’s economy concludes that most analysts failed to understand Indonesia’s economic fundamentals; that the opposition to the currency board was ill-informed; that Soeharto’s embrace of the currency board was sensible; and that the opposition to the currency board was motivated to a considerable extent by the desire to use the financial crisis to force a regime change in Indonesia.

Suggested Citation

  • Ross McLeod, 2014. "The ill-fated currency board proposal for Indonesia," Studies in Applied Economics 17, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.
    • Handle: RePEc:ris:jhisae:0017
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    Cited by:

    1. Gupta, Krisna & Gretton, Paul & Patunru, Arianto, 2022. "Projecting the long run impact of an economic reform: the case of the Indonesian Omnibus Law and concurrent changes in trade policy," Conference papers 333472, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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