Do Currency Boards Have a Future?

  • Anna J. Schwartz


I shall discuss a subject that has recently come to life after decades of dormancy. Sir Alan Walters in his entry on currency boards in The New Palgrave Dictionary of Economics, published in 1987, observed that ‘it would be rash to imagine that currency boards are the wave of the future’.1 Yet five years after that observation, Sir Alan has become an active proponent of currency boards as the wave of the future under certain conditions. The subject is topical, since a currency board is a way of providing a stable monetary system, an essential prerequisite for a well-functioning market system in economies such as the newly independent East European countries.


Monetary Policy Central Bank Foreign Exchange Local Currency Monetary Authority 
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  1. 1.
    Alan Walters, ‘Currency Boards’, in J. Eatwell, M. Milgate and P. Newman (eds), The New Palgrave: A Dictionary of Economics, Macmillan, London, Vol. 1, 1987, p. 740; a revised and updated version of this article, by Walters and Steve H. Hanke, has been included in The New Palgrave Dictionary of Money & Finance, Vol. 1, Macmillan, London, 1992, pp. 558–61.Google Scholar
  2. 3.
    See Steve H. Hanke and Kurt Schuler, ‘Keynes’s Russian Currency Board’, in Steve H. Hanke and Alan A. Walters (eds.), Capital Markets and Development, ICS Press, San Francisco, Ca., 1991, pp. 43–63.Google Scholar
  3. 4.
    Montagu Norman, then the Governor of the Bank of England, advised New Zealand in 1932 to form a central bank if it wanted to be in charge of its own affairs. (G. R. Hawke, Between Governments and Banks: A History of the Reserve Bank of New Zealand, A. R. Shearer, Government Printer, Wellington, New Zealand, 1973, p. 38.Google Scholar
  4. 5.
    Alan Walters, ‘Currency Boards’, in Eatwell, Milgate and Newman (eds.), The New Palgrave: A Dictionary of Economics, op. cit., pp. 740–42; Walters, ‘A Hard Rouble for Boris’, London: Evening Standard, 22 November 1991;Google Scholar
  5. 5a.
    Walters, ‘Should Australia Have a Currency Board?’, in Des Moore (ed.), Can Monetary Policy Be Made to Work? Papers Presented at the IPA Monetary Policy Conference, Jolimont, Australia, Institute of Public Affairs, Economic Policy Unit, 1992; Walters and Steve H. Hanke, ‘Currency Boards’, in The New Palgrave Dictionary of Money & Finance. Vol. 1, op. cit., pp. 558–61;Google Scholar
  6. 5a.
    Hanke and Walters, ‘Reform Begins with a Currency Board’, London: Financial Times, 21 February 1990, p. 17; and Hanke and Walters, ‘East German Currency Board’, Financial Times, 7 March 1990, p. 19.Google Scholar
  7. 6.
    S. H. Hanke and Kurt Schuler, ‘Currency Boards for Eastern Europe’, Heritage Lecture No. 355, Washington, DC: Heritage Foundation, 1991;Google Scholar
  8. 6a.
    and Hanke and Schuler, Teeth for the Bulgarian Lev: A Currency Board Solution, International Freedom Foundation, Washington, DC, 1991.Google Scholar
  9. 7.
    S. H. Hanke, Lars Jonung and Kurt Schuler, Monetary Reform for a Free Estonia: A Currency Board Solution, SNS Förlag, Stockholm, 1992, p. 109 (of manuscript).Google Scholar

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© The Wincott Foundation 1996

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  • Anna J. Schwartz

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