A WCU-based currency board as a sustainable exchange rate regime
Asian economic dynamism in the age of globalisation
Centre for Asian Pacific Studies, Lingnan University
This paper argues that avoidance of economic and financial crises requires that the values of national currencies maintain such real values as to be consistent with the underlying economic fundamentals. The nominal values of the currencies should therefore adjust spontaneously in response to changes in nominal values to preserve the underlying needed real values. When the fundamentals require a change in the real exchange rate, a mechanism for adjustment has to be in place. This paper recommends adopting a monetary anchor in terms of stable purchasing power vis-a-vis a comprehensive basket of world output, and introducing a crawling peg mechanism vis-a-vis this anchor.
Copyright @ 2006 by Centre for Asian Pacific Studies, Lingnan University, Hong Kong. Access to external full text or publisher's version may require subscription.
ISBN of the source publication: 9789627365013
An early version of this paper was presented at the PECC Trade Policy Forum conference in Lima, May 17-19, 2000, and then at the Western Economic Association Conference in Seattle, June 29-July 3, 2002.
Ho, L. S. (2006). A WCU-based currency board as a sustainable exchange rate regime. In E. K. Y. Chen, A. Androuais & L. Augustin-Jean (Eds.), Asian economic dynamism in the age of globalisation (pp. 23-36). Hong Kong: Centre for Asian Pacific Studies, Lingnan University.