The Stability of Currency Boards

The 1990s saw a revival of the currency board system, and proponents have advocated it as an easy-to-set-up exchange rate arrangement providing effective stabilization of the economy. However, the experience of Argentina has highlighted the risks of having a currency board. This study presents both the potential benefits, as well as the risks, of having a currency board by examining the stability of the currency board arrangement and identifying factors affecting the stability. The analysis is based on second-generation currency crisis models, extended to incorporate currency-board specific features and to account for particular aspects often found in currency-board economies.

Autorentext

The Author: Kai Stukenbrock was born in Bremen in 1971. Starting in 1992, he studied economics at the University of Göttingen and the University of California, Los Angeles. In 1997 he became a research fellow at the University of Göttingen, where he earned his doctorate. Since 2002 the author has been working as a rating specialist in sovereign ratings for a financial service provider in London.

Inhalt

Contents: Overview over Currency Board Features - Past and Present Currency Boards - **Stability of Currency Boards in a Currency Crisis Model - The Impact of Foreign-Currency denominated debt on Currency Board Stability.