Search results for "foreign exchange rate"

Le Currency board : les contraintes de financement et d'ajustement de la convertibilité intégrale

2000

The paper scrutinizes the consequences of the adoption of a currency board arrangement (CBA) by some emerging economies during the 1990s. Considering the justifications o f this choice and the different setting-up contexts, it focuses on the implications of a CBA on the financial system and the real economy. A high degree of liquidity of the banking system is required in the absence of a lender-of-last-resort, and the automatic money supply process strictly disciplines the fiscal policy. Monetary stability is restored; but in most o f these economies where capital markets are underdeveloped, CBA's rules make the domestic credit supply dependent on the ability o f the economy to maintain ove…