## Currency Boards: Issues and Experiences

_IMF Policy Discussion Papers, September 1, 1994_

## Source details

**Canonical URL:** [Currency Boards: Issues and Experiences](https://www.imf.org/en/publications/imf-policy-discussion-papers/issues/2016/12/30/currency-boards-issues-and-experiences-1465)

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## Bibliographic details
- Authors: Adam Bennett
- Published: September 1, 1994
- Series: IMF Policy Discussion Papers
- DOI: https://doi.org/10.5089/9781451965056.003

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### Overview
- Discusses issues concerning the operation of currency boards by comparison to conventional exchange rate pegs.
- Examines experiences of three examples: Argentina (from 1991), Hong Kong (from 1983) and Estonia (from 1992).
- Finds that in all three cases, the implementation of currency boards or equivalent arrangements played a significant role in their successful stabilization programs.
- Notes that currency boards derive strength from severely constraining the policy maker’s room for manoeuvre, by comparison to conventional pegs.
- States that currency boards generally require an even stricter and less forgiving attitude to bank failure, wage and price rigidities and other disturbances than do exchange rate pegs in general.

### Case studies and examples
- Argentina: currency board arrangement from 1991.
- Hong Kong: currency board arrangement from 1983.
- Estonia: currency board arrangement from 1992.
- In each case, the arrangement is linked to successful stabilization programs (as described in the paper).

### Key characteristics and operational issues
- Currency boards impose severe constraints on policymaker discretion relative to conventional exchange rate pegs.
- Operationally demand a stricter stance toward:
  - bank failure,
  - wage rigidities,
  - price rigidities,
  - other disturbances than required under general exchange rate pegs.

### Policy implications and assessment
- The paper is a Paper on Policy Analysis and Assessment and the author(s) welcome comments on the text.
- Citations should refer to a Paper on Policy Analysis and Assessment of the International Monetary Fund mentioning the author(s) and the date of issuance.
- The views expressed are those of the author(s) and do not necessarily represent those of the Fund.

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_Source: https://www.imf.org/en/publications/imf-policy-discussion-papers/issues/2016/12/30/currency-boards-issues-and-experiences-1465_