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Contribution to Book
A WCU-based currency board as a sustainable exchange rate regime
Asian economic dynamism in the age of globalisation
  • Lok Sang HO, Lingnan University, Hong Kong
Document Type
Book chapter
Publication Date
1-1-2006
Publisher
Centre for Asian Pacific Studies, Lingnan University
Abstract
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.
Additional Information
ISBN of the source publication: 9789627365013
Citation Information
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.