To help overcome its financial crisis, Russia is being urged to create a currency board, which has met with success in other countries such as Argentina, Estonia, and Hong Kong. This study explains what a currency board is and how it differs from a central bank, and examines the advantages and disadvantages of each type of arrangement. The author concludes that currency boards may be quite attractive to small, open economies and a useful prop in those emerging from a very deep macroeconomic crisis, but that their disadvantages outweigh these attractions in most large countries.
... a better balanced evaluation of the merits and shortcomings of currency boards than anything the 'evangelicals' have produced.
Anna J. Schwartz, National Bureau of Economic Research, Inc.
... balanced and even-handed analysis.
Adam Bennett, International Monetary Fund