IDEAS home Printed from https://ideas.repec.org/a/vrs/seejeb/v5y2010i2p7-20n1.html
   My bibliography  Save this article

The Political Economy of Currency Boards: Case of Bosnia and Herzegovina

Author

Listed:
  • Gedeon Shirley

    (Department of Economics, University of Vermont)

Abstract

Currency Board Arrangements (CBAs) operate in several post-socialist European economies as an alternative to traditional central banking. The CBA literature primarily focuses on the discipline of the fixed exchange rate, suggesting that the gain of reduced exchange rate volatility and monetary stability outweigh the loss of independent monetary policy. It does not address the role and impact of foreign ownership of the banking system on currency board dynamics. Through a case study of the CBA in Bosnia and Herzegovina over a ten-year period, including the global financial crisis of 2008-09, this paper suggests that monetary policy is not abandoned; it is decentralized and privatized and critical to the maintenance of financial stability of the CBA.

Suggested Citation

  • Gedeon Shirley, 2010. "The Political Economy of Currency Boards: Case of Bosnia and Herzegovina," South East European Journal of Economics and Business, Sciendo, vol. 5(2), pages 7-20, November.
    • Handle: RePEc:vrs:seejeb:v:5:y:2010:i:2:p:7-20:n:1
    DOI: 10.2478/v10033-010-0011-6
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/v10033-010-0011-6
    Download Restriction: no
    File URL: https://libkey.io/10.2478/v10033-010-0011-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. World Bank, 2009. "Protecting the Poor During the Global Crisis : 2009 Bosnia and Herzegovina Poverty update," World Bank Publications - Reports 3148, The World Bank Group.
    2. Zuzana Brixiova & Laura Vartia & Andreas Wörgötter, 2009. "Capital Inflows, Household Debt and the Boom-bust Cycle in Estonia," OECD Economics Department Working Papers 700, OECD Publishing.
    3. Mr. Atish R. Ghosh, 1998. "Currency Boards: The Ultimate Fix?," IMF Working Papers 1998/008, International Monetary Fund.
    4. Richard W. Kopcke, 1999. "Currency boards: once and future monetary regimes?," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 21-37.
    5. Jean Baptiste Desquilbet & Nikolay Nenovsky, 2004. "Credibility and adjustment: gold standards versus currency boards," William Davidson Institute Working Papers Series 2004-692, William Davidson Institute at the University of Michigan.
    6. Jonathan David Ostry & Atish R. Ghosh & Karl F Habermeier & Marcos d Chamon & Mahvash S Qureshi & Dennis B. S. Reinhardt, 2010. "Capital Inflows; The Role of Controls," IMF Staff Position Notes 2010/04, International Monetary Fund.
    7. Alexandru Minea & Christophe Rault, 2008. "Some New Insights Into Currency Boards: Evidence from Bulgaria," Post-Print halshs-00363380, HAL.
    8. Jean-François Ponsot, 2006. "European Experiences of Currency Boards: Estonia, Lithuania, Bulgaria and Bosnia and Herzegovina," Chapters, in: Matías Vernengo (ed.), Monetary Integration and Dollarization, chapter 2, Edward Elgar Publishing.
    9. International Monetary Fund, 2007. "Bosnia and Herzegovina: Selected Issues," IMF Staff Country Reports 2007/269, International Monetary Fund.
    10. Robert Shelburne, 2008. "Current Account Deficits in European Emerging Markets," ECE Discussion Papers Series 2008_2, UNECE.
    11. Matías Vernengo (ed.), 2006. "Monetary Integration and Dollarization," Books, Edward Elgar Publishing, number 3483.
    12. Shirley J. Gedeon & Dzenan Djonlagic, 2009. "Monetary Policy in Bosnia and Herzegovina Under the Currency Board Regime," Eastern European Economics, Taylor & Francis Journals, vol. 47(2), pages 21-36, March.
    13. Aristovnik, Aleksander, 2006. "How sustainable are current account deficits in selected transition economies?," MPRA Paper 485, University Library of Munich, Germany.
    14. International Monetary Fund, 2010. "Bosnia and Herzegovina: Staff Report for the First Review Under the Stand-By Arrangement," IMF Staff Country Reports 2010/101, International Monetary Fund.
    15. CLIFFORD S. POIROT Jr., 2003. "Did the currency board resolve Bulgaria's financial crisis of 1996-97?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 26(1), pages 27-55.
    16. Holger C. Wolf & Atish R. Ghosh & Helge Berger & Anne-Marie Gulde, 2008. "Currency Boards in Retrospect and Prospect," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262232650, April.
    17. John Williamson, 1995. "What Role of Currency Boards?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa40, April.
    18. International Monetary Fund, 2008. "Bosnia and Herzegovina: Selected Issues," IMF Staff Country Reports 2008/326, International Monetary Fund.
    19. Kraft, Evan & Jankov, Ljubinko, 2005. "Does speed kill? Lending booms and their consequences in Croatia," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 105-121, January.
    20. Shirley J. Gedeon, 2009. "Money supply endogeneity under a currency board regime: the case of Bosnia and Herzegovina," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 32(1), pages 97-114, September.
    21. Schwartz, Anna J., 1993. "Currency boards: their past, present, and possible future role," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 147-187, December.
    22. Adalbert Winkler, 2009. "Southeastern Europe: Financial Deepening, Foreign Banks and Sudden Stops in Capital Flows," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 84-97.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Neven Valev, 2000. "Building Monetary Credibility in a Transforming Economy," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0212, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. Dorota Zuchowska, 2015. "Accession To The Eurozone As Lithuania’S Exit Strategy From The Currency Board System," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 10(3), pages 27-43, September.
    3. Alain Raybaut & Dominique Torre, 2004. "Unions monétaires, caisses d'émission et dollarisation : les fondements analytiques des systèmes de change « ultra-fixes »," Revue d'Économie Financière, Programme National Persée, vol. 75(2), pages 37-54.
    4. Sophie Chauvin, 2001. "Exit Options for Argentina with a Special Focus on Their Impact on External Trade," Working Papers 2001-07, CEPII research center.
    5. Krus, Nicholas, 2012. "The Money Supply in Currency Boards," Studies in Applied Economics 3, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.
    6. Neven Valev & John A. Carlson, 2002. "Tenuous Financial Stability," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0210, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Miller, Jeffrey & Petranov, Stefan, 2001. "The Financial system in the Bulgarian economy," MPRA Paper 107704, University Library of Munich, Germany, revised Oct 2001.
    8. Dorota Zuchowska, 2015. "Accession to the Eurozone as Lithuania’s exit strategy from the currency board system," Working Papers 10/2015, Institute of Economic Research, revised Feb 2015.
    9. repec:zbw:bofitp:1999_009 is not listed on IDEAS
    10. Vlastimir Vukovic & Aleksandar Zdravkovic, 2011. "The Inflation and Exchange Rate in the Five Balkan Countries from Maastricht Convergence Criteria Prospect," Book Chapters, in: Stefan Bogdan Salej & Dejan Eric & Srdjan Redzepagic & Ivan Stosic (ed.), Contemporary Issues in the Integration Processes of Western Balkan Countries in the European Union, chapter 3, pages 38-55, Institute of Economic Sciences.
    11. Raoul Lättemäe, 2001. "Monetary transmission mechanism in Estonia - some theorethical considerations and stylized aspects," Bank of Estonia Working Papers 2001-4, Bank of Estonia, revised 13 Oct 2001.
    12. repec:cbk:journl:v:2:y:2013:i:2:p:71-84 is not listed on IDEAS
    13. Guergana Stanoeva, 2004. "Les caisses d’émission des Pays Baltes et de la Bulgarie : la recherche d’une crédibilité renforcée," Revue d'Économie Financière, Programme National Persée, vol. 75(2), pages 85-112.
    14. Richard W. Kopcke, 1999. "Currency boards: once and future monetary regimes?," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 21-37.
    15. Neven Valev & John Carlson, 2007. "Beliefs about Exchange‐Rate Stability: Survey Evidence from the Currency Board in Bulgaria," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 10(2), pages 111-121.
    16. Pieter van Foreest & Casper de Vries, 2003. "The Forex Regime and EMU Expansion," Open Economies Review, Springer, vol. 14(3), pages 285-298, July.
    17. Yum K. Kwan & Francis T. Lui & Leonard K. Cheng, 2001. "Credibility of Hong Kong's Currency Board: The Role of Institutional Arrangements," NBER Chapters, in: Regional and Global Capital Flows: Macroeconomic Causes and Consequences, pages 233-259, National Bureau of Economic Research, Inc.
    18. Asa Malmstrom Rognes & Catherine R. Schenk, 2023. "One country, two currencies: The adoption of the Hong Kong currency board, 1983," Economic History Review, Economic History Society, vol. 76(2), pages 477-497, May.
    19. SL Mollentze, 2002. "The Suitability Of A Currency Board For An Emerging Market Economy," South African Journal of Economics, Economic Society of South Africa, vol. 70(1), pages 1-28, March.
    20. repec:spo:wpmain:info:hdl:2441/6961 is not listed on IDEAS
    21. Feng, Shu & Fu, Liang & Ho, Chun-Yu & Alex Ho, Wai-Yip, 2023. "Political stability and credibility of currency board," Journal of International Money and Finance, Elsevier, vol. 137(C).
    22. de Haan, Jakob & Berger, Helge & van Fraassen, Erik, 2001. "How to reduce inflation: an independent central bank or a currency board? The experience of the Baltic countries," Emerging Markets Review, Elsevier, vol. 2(3), pages 218-243, September.
    23. Cappiello, Antonio, 2006. "I currency board come strumento di stabilizzazione economica: come funzionano e dove sono adottati [Currency boards as instrument for economic stabilisation: how they work and where they are adopte," MPRA Paper 4966, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:seejeb:v:5:y:2010:i:2:p:7-20:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.