A Currency Board Solution for the Albanian Lek

Washington, D.C.: International Freedom Foundation, 1991

35 Pages Posted: 30 Apr 2013

See all articles by Steve H. Hanke

Steve H. Hanke

Johns Hopkins University - Department of Economics

Kurt Schuler

Center for Financial Stability

Abstract

To have a stable currency, Albania needs to avoid both foreign political influences on its monetary policy, as under National Bank of Albania, and domestic political influences, as under the State Bank of Albania. It needs to remove monetary policy from political influence. Albania needs to give its monetary reform instant credibility, to avoid the dangers of continuing inflation on the one hand and depression on the other hand. The best way to do so is to strip the State Bank of Albania its currency issuing functions, and to establish a currency board, whose only job will be to issue a convertible currency according to strictly defined rules. A currency board is explicitly designed to maintain a fixed exchange rate. A board is easy to establish and operate, and it has worked successfully time and time again. Indeed, currency boards have always been able to maintain fixed-rate currency convertibility, even during the most trying times.

Keywords: Steve, Hanke, Kurt, Schuler, Currency, Board, Solution, Albania, International, Freedom, Foundation

Suggested Citation

Hanke, Steve H. and Schuler, Kurt, A Currency Board Solution for the Albanian Lek. Washington, D.C.: International Freedom Foundation, 1991. Available at SSRN: https://ssrn.com/abstract=2257976

Steve H. Hanke (Contact Author)

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States
410-516-7183 (Phone)
410-516-8996 (Fax)

Kurt Schuler

Center for Financial Stability ( email )

New York, NY
United States

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