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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.

Language
English
Publisher Statement
Copyright @ 2006 by Centre for Asian Pacific Studies, Lingnan University, Hong Kong. Access to external full text or publisher's version may require subscription.
Additional Information

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.

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.