Independent Currency Authorities: An Analytic Primer

ByKent Osband, Delano Villanueva

July 1, 1992

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides an analytic overview of independent currency authorities (ICAs), sometimes called currency boards. ICAs issue and redeem domestic currency against an exchange standard on demand and back such operations through a 100 percent marginal foreign reserve cover. They also impose significant constraints on the banking system and the budget of the country that operates them. When supporting institutions have been put in place, ICAs appear to have promoted price stability, foreign trade, saving, and investment.

Subject: Banking, Central banks, Currencies, Currency boards, Foreign exchange, Inflation, International reserves, Money, Prices, Reserve currencies

Keywords: Africa, Asia and Pacific, board arrangement, Caribbean, crawling peg, Currencies, currency, currency authority, currency board, Currency boards, Eastern Europe, exchange obligation, foreign currency, Ica arrangement, Ica need, Ica system, Ica wish, ICA., Inflation, International reserves, issued currency, pound sterling, Reserve currencies, West Africa, WP

Pages:
30
Volume:
1992
DOI:
https://doi.org/10.5089/9781451846881.001
Issue:
050
Series:
Working Paper No. 1992/050
Stock No:
WPIEA0501992
ISBN:
9781451846881
ISSN:
1018-5941

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Notes

Also published in Staff Papers, Vol. 40, No. 1, March 1993.

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