Currency Boards in Theory and Practice: The Case of Argentina

Central banks in a number of countries have become engines of inflation through their money creating powers. To obviate this, some countries such as Argentina have adopted a currency board as an alternative form of monetary authority. This paper explains the mechanics of a currency board vis à vis a central bank and examines how the Argentinian economy has progressed from the establishment of its quasi-currency board in 1991 until March 2001.