Monetary Research Center

13/2017 Reflections on Currency Boards and Monetary Federalism (Book review in Bulgarian and English)
Issued in Thursday, January 5, 2017

The book of Hadrien Saiag (HS) took me back to memories, exactly twenty years ago. In 1996 Bulgaria went through a deep financial crisis and hyperinflation, and in mid-1997 introduced the Currency Board similarly to Argentina in 1991. The introduction of the Currency Board coincided with the outset of my research career in the Bulgarian Central Bank. During that period our attention was focused entirely on the new radically changed monetary system. I as well as most Bulgarian economists considered that the introduction of the Currency Board was the right decision providing the fresh onset of a strict monetary order, clear rules and suspension the vicious practices of uncontrolled and bandit accumulation of debts and their consistent monetization through the emission of money. Argentina and its monetary system was a model to be followed and in a sense admired. Domingo Cavallo was a hero while a number of Argentinian economists visited Bulgaria and explained the operation and effects of the Currency Board and the Convertibility Law. I remember Cavallo’s article entitled "The Quality of Money" (1999)[1], which I discussed with my students. I particularly liked that Cavallo began his arguments with the sentence "Money Is an Institution".

[1] This article was Cavallo’s speech on the occasion of his being awarded the honorary degree of Doctor Honoris Causa of the University of Paris, Sorbonne.


This paper is available as PDF (0.69MB)

BECOME A FELLOW OF MRC | MRC 6th Annual Conference Click here