Dual Currency Boards : A Proposal for Currency Stability

This paper shows that extending the convertibility guarantee of the traditional currency board to a second reserve currency brings about an automatic, market-driven change of the peg when the initial reserve currency appreciates beyond a specified level. The "dual" currency board thus maintains the advantages of a hard peg, but avoids the economic difficulties associated with the link to an overvalued reserve currency. As an added benefit, the system has the potential to promote global currency stability, with the reserves of the dual currency board country acting as a buffer stock to the exchange cross-rate of the chosen reserve currencies.
Publication date: December 2000
ISBN: 9781451860108
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This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Money and Monetary Policy , Money and Monetary Policy , International - Economics , International - Economics , fixed exchange rates , currency board , exchange rate , reserve currency , reserve currencies

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