Effectiveness of Specific Monetary Policy by the Currency Board

2013 ◽  
Vol 20 (3) ◽  
pp. 325-334
Author(s):  
Kamelia Assenova
Keyword(s):  
Monetary Policy ◽  
Currency Board

scholarly journals The Competitiveness in the Light of the Balassa-Samuelson Effect

2016 ◽  
Vol 1 (3) ◽  
pp. 15 ◽  
Author(s):  
Srdjan Amidzic ◽  
Sinisa Kurtes ◽  
Perica Rajcevic
Keyword(s):  
Monetary Policy ◽  
Productivity Growth ◽  
Developing Economies ◽  
International Market ◽  
Currency Board ◽  
Transitional Countries ◽  
Tradable Goods ◽  
High Inflation ◽  
Board System ◽  
High Influence

The paper aims to analyze the influence of the Balassa-Samuleson effect on the competitiveness of Bosniaand Herzegovina. As we know, theBalassa and Samuelson argue that developing economies have an appreciating currency, because they have relatively high inflation due to higher productivity growth in the production of tradable goods. This problem has existed, more or less, in all transitional countries in the EasternEurope, and it was particularly stressed in the countries with a fixed exchange rate. This paper just shows that in Bosnia and Herzegovina, in which monetary policy operates on the principles of "currency board", there is an extremely high influence of theBalassa-Samuelson effect, which leads not only to make a competitive position on the international market worse, but it brings up the question of sustainability of the existing currency board system.

scholarly journals Business cycle synchronization and monetary policy in Bosnia and Herzegovina

Bankarstvo ◽  
2021 ◽  
Vol 50 (2) ◽  
pp. 8-20
Author(s):  
Dragan Jović
Keyword(s):  
Monetary Policy ◽  
Business Cycle ◽  
Central Bank ◽  
Bosnia And Herzegovina ◽  
Great Part ◽  
Currency Board ◽  
The Business Cycle ◽  
Further Development ◽  
Discretionary Monetary Policy ◽  
New Instruments

By adopting the currency board at the end of the last century, and by pegging its exchange rate to the Euro, a quarter of a century ago, Bosnia and Herzegovina surrendered a great part of its monetary policy in the hand of European Central Bank in the hope that the synchronization of the business cycle will make foreign monetary policy completely suitable for Bosnia and Herzegovina. At the same time during these two decades, the Central Bank of Bosnia and Herzegovina has been developing and using reserve requirement and remuneration as discretionary instruments of monetary policy. The research shows that the domestic business cycle and the foreign one are relatively weakly synchronized compared to other countries' degree of synchronization, and by this findings current discretionary monetary policy and its further development and enrichment with new instruments is fully justified. Bosnia and Herzegovina must continue with developing its own discretionary monetary policy without relying on foreign monetary policy.

scholarly journals MONETARY POLICY IN ADVANCED ECONOMIES DURING THE GLOBAL FINANCIAL CRISIS: LESSONS FOR LITHUANIA

Ekonomika ◽  
2014 ◽  
Vol 93 (1) ◽  
pp. 40-56
Author(s):  
Birutė Visokavičienė
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Empirical Studies ◽  
Policy Instruments ◽  
Policy Tools ◽  
Currency Board ◽  
Advanced Economies ◽  
Maastricht Criteria

Abstract. The main goal of the research is to develop monetary policy tools and measures enabling to achieve macroeconomic goals of integration into the euro area in the immediate future. It is noted that until the introduction of the euro Lithuania does not have a monetary policy and applies the currency board regime pegging the litas invariably to the euro (hard peg regime). Therefore, it is not only difficult but also risky to try to achieve financial and economic stability in accordance with the relevant Maastricht criteria through fiscal policy measures alone. Monetary policy instruments are necessary to achieve price stability and the overall financial stability. Currently, Lithuania should address the problem of balancing the currency board regime and the Maastricht criteria as a macroeconomic objective through monetary policy tools and measures.The analysis of monetary policies of advanced economies and, first of all, of the euro area reveals the main features of transmission of the monetary policy to a real economy, which can contribute to the successful integration into the euro area. A systemic analysis of the monetary policy is based on monetary and economic theories, laws and patterns, scientific literature and empirical studies. The method used is the logical analysis and systemising of academic literature and modelling of the monetary policy. Such a methodological position enables the justification of the influence of the euro and monetary policy on the future development of the national economy.Key words: monetary policy, euro, exchange rate, inflation, indicators

scholarly journals Estonian currency board and economic performance

1998 ◽  
Vol 1 (3) ◽  
pp. 463-482 ◽  
Author(s):  
M. Sõrg
Keyword(s):  
Monetary Policy ◽  
Economic Reform ◽  
Economic Performance ◽  
Central Banks ◽  
Currency Board ◽  
Fixed Rate ◽  
Paper Money ◽  
And Performance ◽  
Foreign Assets

The sole function of an orthodox (or "pure") currency board was to issue paper money fully backed by foreign assets, for which it was exchangeable at a fixed rate. Present-day currency board arrangements, however, are usually coupled with certain instruments of monetary policy too, albeit less extensive than in the case of conventional central banks. This paper sketches the establishment of the Estonian currency board in 1992, and its subsequent impact on the economic reform and performance in Estonia.

scholarly journals Могући правци развоја монетарне политике БиХ у циљу подстицања економског раста // Possible tendencies of BiH monetary policy in encouraging the economic growth

2014 ◽  
Vol 12 (20) ◽  
pp. 213
Author(s):  
Бранка Топић-Павковић
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Bosnia And Herzegovina ◽  
Open Economy ◽  
Current Account Balance ◽  
Currency Board ◽  
Policy Model ◽  
Currency Boards ◽  
And Control

Резиме: Осигурати раст националне економије, уз истовремену унутрашњу и спољну стабилност цијена, поставља се као примарни задатак економске политике. Избор валутног одбора као модела управљања монетарном политиком обезбјеђује раст повјерења у домаћу валуту, макроекономску стабилност и јачање кредибилитета централне банке, посебно у земљама транзиционих и реформских процеса. Полазећи од ограничења овог модела монетарне политике, питања домаће конкурентности и контроле биланса текућег рачуна постају све битнија. У условима немогућности интервенције монетарне политике штетне посљедице на извоз и економски раст земље несумњиво показују да класични монетарни одбор представља погодно средство монетарне стабилизације, али не и механизам динамизирања привредног раста. Рад се фокусира на избор облика монетарне политике која би у датим условима могла да обезбиједи највећи допринос расту и привредном опоравку. Циљ рада је указати на могуће модификације постојећег система монетарног одбора у Босни и Херцеговини, анализом савремених валутних одбора и искустава земаља чланица које су примјењивале овај режим прије приступања Европској (монетарној) унији. Резултати истраживања потврђују низ предности које монетарни одбор пружа малим и отвореним економијама, али истичу и недостатке који доводе у питање одрживост овог аранжмана монетарне политике и воде модификацији постојећег модела валутног одбора, што би проширило дјеловање Централне банке Босне и Херцеговине.Summary: To ensure the growth of the national economy with simultaneous internal and external price stability is set as the primary goal of economic policy. Choosing the currency board as a model of monetary policy provides increased confidence in the local currency, macroeconomic stability and strength of the central bank credibility, especially in development countries. Considering the constraints of the currency board, national competitiveness and control of the current account balance are becoming very significant questions. In terms of the inability of monetary policy interventions to effect on exports and economic growth of the country, undoubtedly show that classical monetary board is a convenient measure of monetary stabilization but not the mechanism of intensification of economic growth. This paper focuses on the choice of monetary policy model to the given conditions which could provide the growth and economic recovery. The aim of this paper is to emphasize the possible modification of the existing system of currency board in Bosnia and Herzegovina, by analyzing modern currency boards and experiences of member states that have followed this regime before accession to the European (Monetary) Union. The results confirmed a number of benefits that monetary board provides for a small and open economy, but also point out the shortcomings that stress questions about the sustainability of this arrangement and possible tendencies of modification of existing model of the currency board, primarily with widening the instruments and action of the Central Bank of Bosnia and Herzegovina.

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

2010 ◽  
Vol 5 (2) ◽  
pp. 7-20 ◽  
Author(s):  
Shirley Gedeon
Keyword(s):  
Political Economy ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Bosnia And Herzegovina ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Central Banking ◽  
The Political ◽  
Currency Board ◽  
Currency Boards

The Political Economy of Currency Boards: Case of Bosnia and HerzegovinaCurrency 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.

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