Eighteen well-known policymakers and economists discuss the rising use of currency substitution in Latin America. They examine the effects of currency boards on substitute currencies and on national stabilization programs. Latin American countries including Argentina, Bolivia, Peru, and Uruguay increasingly use dollars as a substitute for domestic currency. The experts debate whether the region should encourage or resist this trend. Topics include the effects of substitution on inflation, liquidity, and exchange rates. The discussions on Argentina, Peru, and Brazil focus on the ways in which currency boards have affected stabilization in these countries. They consider whether such boards can strengthen fiscal discipline and speed economic adjustment. A currency board issues money that is converted into a foreign reserve currency at a fixed exchange rate. This independent institution takes over the central bank's role as the sole issuer of base money. It also manages the exchange rate to keep the currency stable and convertible.Nissan Liviatan. f. Setting the initial ER One of the risks of installing a fixed ER regime is in setting the initial level of the ER. It is always difficult to ... This problem becomes more serious when we deal with strong commitments which are supposed to be maintained for it long time. ... But it is also true that the strength of the institutional commitment is influenced by the fiscal stance and vice versa, i.e. the xvi.
|Title||:||Proceedings of a Conference on Currency Substitution and Currency Boards|
|Publisher||:||World Bank Publications - 1993-01-01|