This series aims to make available to the general public and to economic policy practitioners, a selection of policy papers prepared by the staff of the International Monetary Fund. Papers in the International Economic Policy Review will offer specific policy-relevant analysis, but at a relatively non-technical level. These papers are intended to provide analytical background for IMF-supported programs and more generally to shed light on a range of policy choices facing ministries and central banks.
The past years have witnessed a revival of interest in the adoption of currency board arrangements (CBAs).This paper argues that the successful establishment of a CBA requires that, in addition to adopting appropriate macroeconomic policies, the authorities make careful preparations on the technical aspects of the transition. The range of necessary preparations will vary from country to country, but will generally involve changing the central bank law, reorganizing the central bank, devising appropriate guidelines for reserve management, and adapting the government’s cash and debt management activities. Additional measures are required for countries that recently experienced banking sector problems.
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