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The Currency Board Debate of the 1940s-1960s

Author

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  • Parth Thakkar

    (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)

Abstract

The late 1940s to the 1960s featured a sustained debate about currency boards in underdeveloped (or, in today’s parlance, developing) economies and their desirability compared to the alternative of central banking. Critics of currency boards found fault with them for the foregone cost of their “idle reserves,” their implied deflationary bias, their lack of discretionary monetary policy, and their lack of a lender of last resort, among other things. Defenders of the currency board system argued that the criticisms were either incorrect or irrelevant. After carefully reviewing the debate, I opine on it, coming down mainly on the side of the defenders of currency boards.

Suggested Citation

  • Parth Thakkar, 2021. "The Currency Board Debate of the 1940s-1960s," Studies in Applied Economics 192, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.
    • Handle: RePEc:ris:jhisae:0192
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    References listed on IDEAS

    as
    1. H. A. Shannon, 1952. "The Modern Colonial Sterling Exchange Standard," IMF Staff Papers, Palgrave Macmillan, vol. 2(2), pages 318-362, April.
    2. Eugene A. Birnbaum, 1957. "The Cost of a Foreign Exchange Standard or of the Use of a Foreign Currency as the Circulating Medium," IMF Staff Papers, Palgrave Macmillan, vol. 5(3), pages 477-491, February.
    3. John Williamson, 1995. "What Role of Currency Boards?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa40, Junio.
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    Keywords

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    JEL classification:

    • B27 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - International Trade and Finance
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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