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Topic: Argentine Currency Board

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	Currency board - Wikipedia, the free encyclopedia
		A currency board is a monetary authority which is required to maintain an exchange rate with a foreign currency.
		Estonia established a currency board pegged to the Deutsche Mark in 1992 after gaining independence, and this policy is seen as a mainstay of that country's subsequent economic success (see Economy of Estonia for a detailed description of the Estonian currency board).
		A gold standard is a special case of a currency board where the value of the national currency is linked to the value of gold instead of a foreign currency.
	en.wikipedia.org /wiki/Currency_board (513 words)

	John O'Sullivan on euro and Argentina on National Review Online
		Though the Argentine crisis began as a currency problem (aggravated, to be sure, by excessive government spending), it quickly became a political and constitutional crisis with rioting in the streets and five presidents succeeding each other within two weeks.
		In short, there was so much going on that many people forgot the root of the crisis: namely that the Argentine currency board, by taking on the obligation to exchange one dollar for one peso, was compelled to raise interest rates to the point where it inflicted a seemingly endless recession on the economy.
		Those who labor on its editorials are dedicated in principle to the euro, the concept of currency boards, currency unions, and other "hard" versions of fixed rates and so they are reluctant to suggest that such mechanisms might be fatally flawed.
	www.nationalreview.com /jos/jos011002.shtml (1229 words)

	Hispanic American Center for Economic Research - A Response to Currency Board Critics
		The inflexible currency board and overvalued peso caused the Argentine crisis.
		Currency board critics assert that the peso’s one-to-one link with the dollar under convertibility left the peso overvalued and made Argentine exports uncompetitive, contributing to a general economic malaise.
		Even though the Argentine courts subsequently ruled, in September 2002, that the pesofication of the economy and devaluation were illegal, a confiscation of peso holders’ property (i.e., the central bank’s dollar reserves of $17.8 billion) occurred in January 2002 (Hanke 2003).
	www.hacer.org /current/LATAM50.php (3503 words)

	A Tale of Two Pesos: A Comparison of Currency Policies in Mexico and Argentina
		Although many currencies in developed countries float, few of the developing countries float their currencies, and for those that do float, it tends to be a short-lived experiment (Schuler, 1995).
		Currency boards spread to other British colonies and to independent countries that wanted to earn income from having their own currencies, yet maintain fixed exchange rates with an anchor currency.
		Argentina re-established a currency board briefly from 1927 to 1929, but suspended it again in December 1929, as a result of the worldwide stock-market crash and the resulting cessation of foreign investment in Argentina.
	www.heritage.org /Research/LatinAmerica/HL552.cfm (5610 words)

	Argentina's Currency Crisis: Lessons for Asia - FRBSF Economic Letter (08/16/2002) (Site not responding. Last check: 2007-11-03)
		Argentina maintained a currency board regime from April 1, 1991, through January 6, 2002, under which the Argentine peso was pegged one for one to the U.S. dollar.
		The currency board initially was allowed to hold as little as 66.6% of its assets in true foreign reserves.
		The currency arrangements proposed for Asian nations vary widely in intensity, ranging from regional insurance schemes aimed at forestalling future financial crises to agreements that could culminate in an Asian version of the EMU with a single currency for the region.
	www.frbsf.org /publications/economics/letter/2002/el2002-25.html (2060 words)

	Nouriel Roubini's Discussion Board
		Argentina's way out is to keep the currency board as it is and to avoid measures that threaten the credibility of their commitment.
		Argentine debt/GDP ratio (52% on a consolidated basis) is far from being a large one.
		The main lesson from the Argentine's currency board failure is that pegging the exchange rate it's far from being an optimun policy.
	pages.stern.nyu.edu /~nroubini/discus/messages/9/25.html (1384 words)

	Straining at the Anchor: The Argentine Currency Board and the Search for Macroeconomic Stability, 1880-1935
		It centers on the predecessor of Argentina's recent currency board, its commitment to gold from 1890 to 1931.
		As with the currency board, the gold standard was the cure for Argentina's existing problems, deriving from the Baring Crisis of 1890 and its aftermath.
		Unlike the recent currency board, Argentina's commitment to gold lasted forty years, surviving the massive shock of the First World War and succumbing finally only to the even bigger shock of the Great Depression.
	eh.net /bookreviews/library/0477.shtml (1195 words)

	The new route: dollarization - The Argentine case - Monografias.com
		Nonetheless, these periods of tribulations were not caused by the currency mechanisms per se, but by the unsound institutions that were in charge of the economic structure.
		Nevertheless, in spite that the currency broad and dollarization are very similar (at least in a first sight) the differences are quite significant.
		Argentines have shown that the characteristics they want in a currency are those that the dollar has: low inflation, full convertibility, the prospect of continued good performance in the future, and international acceptability.
	www.monografias.com /trabajos10/12newreute/12newreute.shtml (2753 words)

	Currency board defended - Business news
		He said the board guaranteed predictable foreign currency exchange rates, stable prices and interest rates, and was one of the few mechanisms that led to macro-economic stability in Bulgaria.
		One of the mechanisms to achieve stable growth under a currency board agreement was to restructure the expenditure side of the budget, in order to reduce taxes, Manchev said.
		They argued that growth rates should not be an end in itself but a feature of the currency board because this would be the only way to compensate for weaknesses of the fixed exchange rate and the impossibility of stimulating an active trade balance through monetary and currency policies.
	www.sofiaecho.com /article/currency-board-defended/id_3663/catid_23 (730 words)

	What Monetary Regime for Post-War Iraq? (2003-13, 05/09/2003) (Site not responding. Last check: 2007-11-03)
		Unlike simple fixed rate regimes, a standard currency board is obligated to hold reserves that exceed outstanding domestic currency so as to have the capacity to redeem all outstanding currency at the announced peg.
		With a fully backed currency board in place, holders of Iraqi currency would know that as long as the government was committed to the maintenance of the exchange rate peg they would be able to convert their claims at the announced peg.
		Second, the currency board acted as a lender of last resort, extending funds to Argentine commercial banks during the Mexican peso crisis of 1995.
	www.frbsf.org /publications/economics/letter/2003/el2003-13.html (1871 words)

	TheStreet.com: The Real Is Cut Loose
		Ironically, even though the decision to allow the currency to float may lead to a larger decline in the real, Brazilian asset markets will likely recover as bargain-hunters step in.
		The odds continue to favor the perseverance of the Argentine currency board.
		While it is not common for the deputies to issue a statement afterward, given the situation, a formal statement or, at least, supportive remarks for Brazil might occur after the Saturday meeting in Frankfurt.
	www.thestreet.com /comment/currency/651794.html (865 words)

	Honolulu Star-Bulletin Business
		A currency board is a monetary institution that issues base money solely in exchange for a major international currency known as reserve currency.
		The currency board is a special form of fixed exchange rate arrangements usually adopted by smaller economies.
		In reaction to the failure of Argentine currency board system, the Hong Kong Monetary Authority (which is the de-facto central bank) identifies two major differences between Hong Kong and Argentina: Hong Kong has the world's fourth largest foreign exchange reserves of $110 billion and it owes zero external debt.
	starbulletin.com /2002/02/22/business/pacific.html (562 words)

	About IPD \|\| Advisory Board (Site not responding. Last check: 2007-11-03)
		Dollarization is the process by which a country abandons its own currency and adopts the currency of a more stable country as its legal tender.
		Before the Argentine peso was devalued in January, 2001, most major transactions such as car loans and mortgages were conducted in dollars.
		The US dollar is the most trusted currency in the world and any country that adopts it also adopts the monetary policy of the Federal Reserve Board.
	www.gsb.columbia.edu /ipd/j_dollarization_bk.html (2395 words)

	Asia Times
		The HKMA was granted bank regulatory powers, and began to develop an institutional schizophrenia as both the keeper of a currency board and a central bank.
		Both industry and labor had wanted for a long time a lower-valued currency (the real) to relieve Brazil from a high (70 percent) interest rate and to revive an export sector saddled with heavy foreign debt, even if the pre-devaluation low inflation of 3 percent was expected to rise as a result.
		In reaction to the failure of the Argentine currency board system, the HKMA identifies two major differences between Hong Kong and Argentina: Hong Kong has the world's fourth-largest foreign-exchange reserves of $110 billion and it owes zero external sovereign debt, although some agency and private external debt.
	www.atimes.com /atimes/China/DJ16Ad04.html (8667 words)

	Instability born out of...
		Unlike what happened in Russia on August 17 1998, the Argentine default on its dollar denominated debt was not a surprise and the level of overseas investor positions and leverage in emerging markets is so small currently as to be a source of concern itself.
		The importance of the rand's collapse alongside the unraveling of the Argentine currency board is that both South Africa and Argentina were hailed as icons of virtue in macro-economic policy-making less than eighteen months ago.
		It is important that we learn the right lessons from the current misery of ordinary Argentines and South Africans; perhaps this episode could even help to define a new approach to international economic policy and international investing.
	www.caribvoice.org /Business/Avinash/crisis.html (873 words)

	Argentines aren't learning right lesson from debacle
		Adopting a currency board that limits one country’s money supply to its holdings or some other country’s currency is inherently an admission of institutional failure.
		And it did not tell Argentines that their system of public and private pensions were overly generous and unsustainable except in the short run.
		The currency board and peso-dollar convertibility were not a cure.
	www.edlotterman.com /Argentines.htm (876 words)

	CNN.com - Hong Kong battles peg pesomism - January 10, 2002
		Still, the Argentine currency board announced on Sunday that it would devalue the peso to 1.4 pesos to the U.S. dollar, abandoning its decade-long 1:1 peg.
		Currency traders say Hong Kong faces a much bigger problem than Argentina fallout, anyway.
		That would spell deep trouble for Hong Kong's peg, he noted, and mean problems for Malaysia's peg on its currency, the ringgit.
	archives.cnn.com /2002/BUSINESS/asia/01/08/hkpeg.argentina (1047 words)

	myNotes » Blog Archive » Argentina’s Financial Crisis: A Nation in Hot Water by Alejandra Mejia (Site not responding. Last check: 2007-11-03)
		The Mexican crisis “put pressure on the Argentine currency, and interest rates rose sharply in early 1995, precipitating a brief recession […] Partly because of some luck (a depreciation of the US dollar against other major currencies), the crisis passed, and growth resumed strongly in 1996 and 1997” (Bleaney 2004:701).
		However, what this paper intends to highlight is that the Argentine crisis does not have a sole guilty party to point fingers at; it was the conjunction of several internal and external variables that led to the tragic Argentinean financial crash.
		In addition, it must be understood that currency boards do not endure as much as people would like them to, especially when countries lack strong monetary and fiscal policies and the flexibility to take corrective measures when needed.
	aliquantum.net /wp/?p=21 (2750 words)

	Is Dollarization a Good Idea? - DRCLAS News Fall 1999 (Site not responding. Last check: 2007-11-03)
		However it is clear to several foreign economists that the depth and length of the current Argentine recession is, in part, a result of the convertibility scheme itself.
		Indeed when Argentine economists, members of the Finance ministry, and bankers are asked, "Is dollarization a good idea?" the answer is generally yes, though they only rarely say that to the public.
		Finally the government should focus on improving economic structures and institutions to create confidence, at which point an Argentine currency could be viable on world markets on its own and dollarization would no longer be a consideration.
	www.fas.harvard.edu /~drclas/publications/revista/economy/cohen.htm (1359 words)

	Transcript of a Press Briefing by Thomas C. Dawson, Director, External Relations Department, IMF
		The choice of the currency board-- the choice of any currency regime-- is a country's sovereign choice to make.
		The Bulgarian authorities, much as some of the Baltic authorities, have a track record of being able to follow through on the policies necessary to support the currency board and the Fund stands already to support countries in their choice of a currency regime, assuming that they have the policies that are appropriate for it.
		He was pursuing also a debt restructuring option which we continued to believe was a positive element and had the potential of helping them get out of their difficult situation as late as August of 2001 when we approved the last tranche of the fund.
	www.imf.org /external/np/tr/2002/tr020313.htm (3716 words)

	Cavallo: parallels between Argentina and Russia
		Century, the Argentine born peones had to learn Piamontese in order to be able to communicate with the Italian chacareros (something like a farmer) that they worked for.
		But poor chap, Argentines were suspect of excessive leftism by those times, and he had to get the support of true heavyweights to get admitted.
		If the country is thirsty for foreign currency, and you tie the amount of roubles within the country to the foreign currency you can have in the Central Bank (this is _exactly_ what the Argentine currency board is), then you can starve everyone almost to death legally, and at the same time kill the inflation.
	www.marxmail.org /archives/september98/cavallo.htm (3579 words)

	Safe Haven \| A Tangled Web We Weave
		Today's Wall Street Journal editorial stated that the "sensible policy" of Argentine's currency board fix to the dollar was undermined first by currency devaluation in neighboring Brazil, which apparently the previous administration was supposed to have stopped.
		And while this is a simplification of complex issues, there should be some recognition that the theory behind the currency board is hopelessly outdated.
		Indeed, the very success of Argentine's currency regime in instituting general stability and containing consumer inflation set in motion powerful destabilizing international capital flows and the accumulation of unmanageable dollar denominated debt.
	www.safehaven.com /article-218.htm (4009 words)

	Fixed exchange rate - Wikipedia, the free encyclopedia
		A fixed exchange rate, sometimes (less commonly) called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.
		A currency that uses a fixed exchange rate is known as a fixed currency.
		In essence currency is brought to market, or removed from market via open market operations executed by a central monetary authority.
	en.wikipedia.org /wiki/Fixed_exchange_rate (603 words)

	An Argentine Model For An Indonesian Currency Board (Site not responding. Last check: 2007-11-03)
		Some Argentine economists recommend that Indonesia look to their country's success in controlling currency fluctuations following passage of their 1991 Convertibility Law.
		Because the Argentine peso is convertible to U.S. dollars at a fixed rate, Argentine monetary policy is effectively controlled by the U.S. Federal Reserve.
		Argentine monetary authorities have proven they are willing to permit the complete dollarization of the economy rather than abandon the commitment to convertibility or promote extremely high interest rates.
	www.ncpa.org /pi/internat/pdinter/march98b.html (220 words)

	CNN - Ecuador declares emergency, calls out military - March 9, 1999
		Monday was declared a surprise holiday after a run on banking deposits last week that coincided with a 25 percent drop in the value of the nation's currency, the sucre.
		Armijos said one move being considered was an Argentine-style currency board to peg Ecuador's currency to the U.S. dollar.
		Ecuadorians flocked to withdraw their savings last week on persistent rumors that foreign currency bank accounts would be confiscated -- a move the government has repeatedly denied.
	www.cnn.com /WORLD/americas/9903/09/ecuador.economy (714 words)

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