WORK EXPERIENCE
International economist, Office of International Affairs, U.S. Treasury Department, 2004-present
I work on a grab bag of international financial questions, most related to middle- and low-income countries. Note that most of the material on the site was written before I assumed my current job. All of it represents my personal views only, which are not necessarily those of the U.S. Treasury or any of my past employers.
Senior economist, Joint Economic Committee of the U.S. Congress, 1999-2004
Did work on international economic issues, taxation, Social Security, medical research, high technology, and other subjects for chairman Senator Connie Mack of Florida and chairman (later vice chairman) Representative Jim Saxton of New Jersey. I assisted Senator Mack in drafting the International Monetary Stability Act of 2000 (106th Congress, S. 2101), about which you can read more elsewhere on the site.
Economic consultant, 1990-9
My work on the currency board system influenced monetary reforms in Estonia (1992), Lithuania (1994), Bosnia (1997), and Bulgaria (1997).
Other work included training central bank staff, analyzing devaluation risk, studying economic policy advice, and assessing financial regulation.
Clients included IMCC, the U.S. Agency for International Development, the World Bank, Deutsche Morgan Grenfell, the central bank of El Salvador, and think tanks in the United States and abroad.
Field experience in Africa, Asia, Eastern Europe, and Latin America. Experience in dealing with radio, television, and newspaper reporters.
Postdoctoral fellow, Johns Hopkins University, Baltimore, 1992-6
Taught undergraduate course "Controversies in Applied Economics."
EDUCATION
B.A., St. John's College, Annapolis, Maryland, 1981.
Ph.D. in economics, George Mason University, Fairfax, Virginia, 1992.
SKILLS
Read, speak, and write French; read Spanish and Portuguese. Very familiar with word processing and spreadsheet packages; somewhat familiar with econometric software packages.
Some of the publications listed below are available elsewhere on the site; see the home page. Many of the publications are available for free from me in electronic versions. The electronic addresses are valid as of January 2004. If a link has been dropped, one way to search for it is to use the Internet archive at <http://www.archive.org>. I have given links mainly for the sake of readers who might be interested in some of the country studies or other specialized publications. Among the more general material I have written, almost all that I think may be worthwhile is on the home page.
BOOKS AND MONOGRAPHS
Should Developing Countries Have Central Banks? Currency Quality and Monetary Systems in 155 Countries. Research Monograph No. 52. London: Institute of Economic Affairs, 1996. 126 pp. Spanish translation by Julio Cole ¿Deberían los países en desarrollo tener bancos centrales? Estudio comparativo de 155 países. Monterrey, Mexico: Centro de Estudios en Economía y Educación, 1998. Available elsewhere on my site.
Alternative Monetary Regimes for Jamaica, with Steve H. Hanke. Kingston: Private Sector Organisation of Jamaica, 1996. 106 pp. Available at <http://www.psoj.org/hanke.pdf>.
Currency Boards for Developing Countries: A Handbook, with Steve H. Hanke. International Center for Economic Growth Sector Study No. 9. San Francisco: ICS Press, 1994. 120 pp. Spanish translation by Gustavo Toro and Adriana T. de Undreiner Juntas monetarias para países en desarrollo: dinero, inflación y estabilidad económica. Caracas: CEDICE/Editorial Panapo, 1995. Pirated Bulgarian translation Valutniyat bord nachalo il krai. Sofia: Bard, 1996. Authorized Bulgarian translation by Ina Byachvarova and Margareta Chakapska Valutniyat bord i finansovata stabilizatsiya. Sofia: Klub "Ekonomuka 2000," 1997. Turkish translation, with revisions, by Bekir Berat Özipek and Metin Toprak Gelimekte olan ülkeler çin para kurullari: el kitab. Ankara: Association for Liberal Thinking, 2001. English version available elsewhere on my site.
Valiutu taryba pasiulymai lietuvai (A Currency Board Proposal for Lithuania), with Steve H. Hanke. Translated by Rta Vainien. Vilnius: Lietuvos laisvosios rinkos institutas, 1994. 74 pp. English version available from me.
Russian Currency and Finance: A Currency Board Approach to Reform, with Steve H. Hanke and Lars Jonung. London: Routledge, 1993. 222 pp. English version available from me for US$20, including shipping. Russian translation available for free from me.
Currency Reform for a Market-Oriented Cuba, with Steve H. Hanke. Miami: Blue Ribbon Commission on the Economic Reconstruction of Cuba, 1992. 51 pp.
El sistema de caja de conversión: hacia una auténtica reforma monetaria (The Currency Board System: Towards a Real Monetary Reform), with Steve H. Hanke. Lima: CITEL, 1992. 94 pp.
Monetary Reform for a Free Estonia: A Currency Board Solution, with Steve H. Hanke and Lars Jonung. Stockholm: SNS Förlag, 1992. 91 pp. Estonian translation by Avo Viiol Rahareform vabale eestile: valuutafondi lahendus. Tartu, Estonia: Tartu Ülikool, 1992.
Currency Boards for Eastern Europe, with Steve H. Hanke. Heritage Lectures no. 355 (Heritage Foundation, 1991). 28 pp. Also appeared as Geld und Währung Working Paper no. 23, Wolfgang Goethe Universität, Frankfurt am Main, 1992. French translation by Jacob Arfwedson Réformes monétaires à l'Est: « currency boards » contre banques centrales. Paris: Institut Euro 92, 1991. Portions were also translated as articles in the Romanian newspaper Capital (see below).
A Currency Board Solution for the Albanian Lek, with Steve H. Hanke. Washington: International Freedom Foundation, 1991. 31 pp.
¿Banco central o caja de conversión? (Central Bank or Currency Board?), with Steve H. Hanke. Buenos Aires: Fundación República, 1991. 64 pp.
Teeth for the Bulgarian Lev: A Currency Board Solution, with Steve H. Hanke. Washington: International Freedom Foundation, 1991. 32 pp.
Monetary Reform and the Development of a Yugoslav Market Economy, with Steve H. Hanke. London: Centre for Research into Communist Economies, 1991. 46 pp. Serbo-Croatian translation by Milivoj Cvetanovi Monetarna reforma i razvoj jugoslovenska trišne privrede. Belgrade: Economiski Institut Beograd, 1991.
ARTICLES IN ACADEMIC JOURNALS (don't be afraid: unlike most of the genre, these are actually readable)
"Achieving Monetary Stability at Home and Abroad," with James Gwartney and Robert Stein. Cato Journal 21, 2, Fall 2001: 183-203. Available at <http://www.cato.org/pubs/journal/cj21n2/cj21n2-4.pdf>.
"Note Issue by Banks: A Step toward Free Banking in the United States?" Cato Journal 20, 3, Winter 2001: 453-65. Available at <http://www.cato.org/pubs/journal/cj20n3/cj20n3-8.pdf>. Also in Treasury Management: A Monthly Digest for Forex Professionals (Hyerabad, India), September 2001: 49-55.
"Dollarising Indonesia." Bulletin of Indonesian Economic Studies 35, 3, December 1999: 97-113.
"A Monetary Constitution for Argentina: Rules for Dollarization," with Steve H. Hanke. Cato Journal 18, 3, Winter 1999: 405-19. Available at <http://www.cato.org/pubs/journal/cj18n3/cj18n3-11.pdf>.
"The Problem with Pegged Exchange Rates." Kyklos 52, 1, 1999: 83-102. Some of the same material is covered in "Why Currency Crises Happen," listed below.
"Currency Boards and Currency Convertibility," with Steve H. Hanke. Cato Journal 12, 3, Winter 1993: 147-63. Russian translation "Denezhnaya reforma v Rossii: valyutnoye upravleniye," in James A. Dorn and Rustam N. Noureev, eds., Denechnaye reforma v postkommunisticheskikh stranakh (Monetary Reform in Postcommunist Countries): 252-75. Moscow: Catallaxy, 1996. Also in Larisa E. Piyasheva and James A. Dorn, eds., Ot plana k rynku: budushcheye postkommunistcheskikh respublik (From Plan to Market: The Future of the Post-Communist Republics): 224-40. Moscow: Catallaxy, 1993. English version available at Available at <http://www.cato.org/pubs/journal/cj12n3/cj12n3-10.pdf>.
"Ruble Reform: A Lesson from Keynes," with Steve H. Hanke. Cato Journal 10, 3, Winter 1991: 655-66. Hungarian translation "Rubelkonvertibilitás: a keynesi megoldás." Külgazdaság (Budapest) 36, 2, 1992: 43-50. English version available at <http://www.cato.org/pubs/journal/cj10n3/cj10n3-3.pdf>.
OTHER PUBLICATIONS--ESSAY LENGTH
"La monnaie et l'Etat: le rôle des institutions monétaires dans le sous-développement africain" (Money and the State: The Role of Monetary Institutions in African Underdevelopment). In Nicolas Bouzou, ed., Afrique (Revue labyrinthe, hors série no. 1). Paris: Editions Maisonneuve et Larose, forthcoming. English version available elsewhere on my site.
"The Search for Price Stability: A Legislative History," with Brian Higgenbotham. Staff report, Office of the Vice Chairman, Joint Economic Committee, U.S. Congress, forthcoming.
"How Competitive Is the U.S. Tax System?" Staff report, Office of the Vice Chairman, Joint Economic Committee, U.S. Congress, April 2004.
"La monnaie et l'Etat: le rôle des institutions monétaires dans le sous-développement africain" (Money and the State: The Role of Monetary Institutions in African Underdevelopment). In Afrique (Revue labyrinthe, hors série no. 1). Paris: Editions Maisonneuve et Larose, forthcoming.
"Argentina's Economic Crisis: Causes and Cures." Staff report, Office of the Vice Chairman, Joint Economic Committee, U.S. Congress, July 2003. Available at <http://www.house.gov/jec/imf/06-13-03long.pdf>.
"The Role of the IMF and World Bank in Reconstructing Iraq." Staff report, Office of the Vice Chairman, Joint Economic Committee, U.S. Congress, May 2003.
"Does National Sovereignty Require a National Currency?" In James Dean, Dominick Salvatore, and Thomas Willett, editors, The Dollarization Debate. New York: Oxford University Press, 2003. An earlier version is available from me.
"Deficits, Taxation, and Spending." Staff report, Office of the Vice Chairman, Joint Economic Committee, U.S. Congress, April 2003. Available at <http://www.house.gov/jec/tax/deficits.pdf>.
"The Subsidy in IMF Lending," with Brian Higgenbotham. Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, November 2002. Available at <http://www.house.gov/jec/imf/IMFlending.pdf>.
"Fixing Argentina." Cato Institute Policy Analysis 445. Available at <http://www.cato.org/pubs/pas/pa445.pdf>.
"What Went Wrong in Argentina?" with Steve Hanke. Central Banking (London) 12, 3, February 2002: 43-8. Available at <http://www.cato.org/current/argentina/pubs/hanke-schuler-0202.pdf>.
"Why Currency Crises Happen." Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, January 2002. Available at <http://www.house.gov/jec/crises2.pdf>.
"Hidden Costs of Government Spending." Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, December 2001. Reprinted in The 2001 Joint Economic Report (Joint Economic Committee, U.S. Congress). House of Representatives, 107th Congress, 1st Session, Report 107-347, pp. 102-13. Washington: Government Printing Office, 2002. Avialable at <http://www.house.gov/jec/hidden.pdf>.
"Features and Policy Implications of Recent Currency Crises." Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, October 2001. Available at <http://www.house.gov/jec/crises.pdf>.
"The Alternative Minimum Tax for Individuals: A Growing Burden." Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, May 2001. Available at <http://www.house.gov/jec/tax/amt.pdf>.
Contributor to "The Reagan Economic Legacy: The Great Expansion," Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, October 2000. Available from me.
Contributor to "Social Security in the 21st Century." Staff report, Office of the Chairman, Joint Economic Committee, U.S.
Congress, September 2000. Available from me.
Contributor to "The Benefits of Medical Research and the Role of the NIH." Staff report, Office of the Chairman, Joint
Economic Committee, U.S. Congress, May 2000. Available from me.
Contributor to 2000 Joint Economic Report (Joint Economic Committee, U.S. Congress). Senate Report 106-255. Washington: Government Printing Office, 2000. Reprinted in "The Great Expansion: How It Was Achieved and How It Can Be Sustained." Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, April 2000. Available from me.
Remarks for session "La alternativa de dolarizar" (The Dollarization Option). In Fritz Du Bois and Eduardo Morón, eds., Dolarizar la economía peruana: riesgos y opporunidades. Lima: Instituto Peruana de Economía and Centro de Investigación de la Universidad del Pacifico, 2000: 19-26.
"Dolarización Oficial en Ecuador." Guayaquil: Instituto Ecuatoriano de Economía Política, January 2000. Reprinted in Alberto Acosta (ed.), Dolarización: informe urgente,Quito, Ecuador: ILDIS/Abya-Yala, 2000. Available at <http://www.ladolarizacion.com/Comentatios%20de%20IEEP.html>.
Contributor to 1999 Joint Economic Report (Joint Economic Committee, U.S. Congress). Senate Report 106-169. Washington: Government Printing Office, 1999. Available from me.
"Basics of Dollarization." Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, July 1999. 33 pp. Updated January 2000. 36 pp. Spanish translation by Dora de Ampuero "Fundamentos de la dolarización." Guayaquil: Instituto Ecuatoriano de Economía Política, July 1999. Available elsewhere on my site.
"Replacing Potemkin Capitalism: Russia's Need for a Free-Market Financial System," with George A. Selgin. Cato Institute Policy Analysis no. 348, 7 June 1999. 16 pp. Available at <http://www.cato.org/pubs/pas/pa348.pdf>.
"Encouraging Official Dollarization in Emerging Markets." Staff report, Office of the Chairman, Joint Economic Committee, U.S. Congress, April 1999. 36 pp. Spanish translation by Instituto Ecuatoriano de Economía Política "Promoviendo la dolarización oficial in los mercados emergentes." Available elsewhere on my site.
"A Dollarization Blueprint for Argentina," with Steve H. Hanke. Friedberg's Commodity and Currency Comments, 1 February 1999: 1-12. Also available at <http://www.cato.org/pubs/wtpapers/dollar.pdf>. Shortened version published as Cato Institute Foreign Policy Briefing no. 52, 11 March 1999. Available at <http://www.cato.org/pubs/fpbriefs/fpb-052es.html>. Spanish translation by Juan Carlos Madrigal and Jorge Leal "Propuesta de dolarización para Argentina." Ejecutivos de Finanzas (Mexico) 28, 4, April 1999: 23-32.
"A Contingency Plan for Dollarizing Hong Kong." HKCER Letters (Hong Kong Centre for Economic Research) no. 52, September 1998: 1-20. English plus Chinese summary. Available at <http://www.hku.hk/hkcer/articles/v52/kurt.htm>.
"Currency Boards and Free Banking," with Steve H. Hanke. In Kevin Dowd and Richard H. Timberlake, Jr., eds., Banking and the Nation State: The Financial Revolution, Government, and the World Monetary System: 403-21. Oakland: Independent Institute, 1998.
"The Future of Currency Boards, with Special Reference to Developing Countries" and "Postscript: the Recent Excitement in Hong Kong." In Maggie Tan Pin Neo, ed., Currency Board System: A Stop-Gap Measure or a Necessity. Currency Board System Symposium '97: 102-22 and 128-35. Singapore: Board of Commissioners of Currency Singapore, 1997.
"Veinticinco años sin el patron oro: consecuencias para los países en desarrollo" (Twenty-Five Years Off the Gold Standard: Consequences for Developing Countries). Translated by Dora Rodriguez de Ampuero. Ideas de Libertad no. 37: 6-21. Guayaquil, Ecuador: Instituto Ecuatoriano de Economía Política, 1997. English version available from me.
"Monetary Systems and Inflation in Developing Countries," with Steve H. Hanke. In James A. Dorn and Roberto Salinas-León, eds., Money and Markets in the Americas: New Challenges for Hemispheric Integration: 235-60. Vancouver: Fraser Institute, 1996.
"Currency Boards for Latin America," with Steve H. Hanke. In Nissan Liviatan, ed., Proceedings of a Conference on Currency Substitution and Currency Boards. World Bank Discussion Paper 207 (1994): 13-21.
"Deposit Insurance Déjà Vu." The Freeman, July 1989: 265-9. Reprinted in Hans Sennholz, ed., Bankers and Regulators. Irvington-on-Hudson, New York: Foundation for Economic Education, 1994. Available at <http://www.libertyhaven.com/regulationandpropertyrights/bankingmoneyorfinance/freebanking/deposit.html>.
"History of Free Banking." In Peter J. Boettke, ed., Companion to Austrian Economics: 414-17. Aldershot, England: Edward Elgar, 1994.
"Financial Reform and Economic Development: The Currency Board System for Eastern Europe," with Steve H. Hanke. In Peter J. Boettke, ed., The Collapse of Development Planning: 310-26. New York: New York University Press, 1994.
Translation from French of Philippe Hugon, "The Impact of Adjustment Policies on African Informal Financial Systems." In Lawrence H. White, ed., African Finance: Research and Reform. San Francisco: ICS Press, 1993.
"Free Banking: History," with Lawrence H. White. In Peter Newman, Murray Milgate, and John Eatwell, eds., The New Palgrave Dictionary of Money and Finance, 2: 198-200. London: Macmillan, 1992.
"The World History of Free Banking: An Overview," and "Free Banking in Canada." In Kevin Dowd, ed., The Experience of Free Banking: 4-47, 79-92. London: Routledge, 1992. Read this if you are interested in free banking; the first essay contains material that is still not covered anywhere else.
"A 'Bundesbank' or a 'Reserve Currency Board?'" with Steve H. Hanke and Michael G. Porter. In Des Moore, ed., Can Monetary Policy Be Made to Work? Papers Presented at the IPA Monetary Conference December 1991: 36-50. Jolimont, Australia: Institute of Public Affairs, Economic Policy Unit, 1992.
"Keynes's Russian Currency Board," with Steve H. Hanke. In Steve H. Hanke and Alan A. Walters, eds., Capital Markets and Development: 43-63. San Francisco: Institute for Contemporary Studies, 1991. Similar to the Cato Journal article "Ruble Reform: A Lesson from Keynes," above, but with more documentation, including text of notes by Keynes.
"Replacing the Ruble in Lithuania: Real Change versus Pseudoreform," with George Selgin and Joseph Sinkey, Jr. Cato Institute Policy Analysis no. 163, 28 October 1991. 19 pp. Available at <http://www.cato.org/pubs/pas/pa-163.html>.
"Henry Clews," "William Gouge," and "Hugh Lawson White." In Larry Schweikart, ed., Encyclopedia of American Business History and Biography: 120-2, 225-32, 505-10. New York: Facts on File, 1990.
"A Brief History of Hong Kong Monetary Standards." Asian Monetary Monitor (Hong Kong) 13, 5, September-October 1989: 11-29.
"The Currency System of Macau." Asian Monetary Monitor (Hong Kong), 13, 4, July-August 1989: 1-11.
"Free Banking" (bibliographical essay). Humane Studies Review (Institute for Humane Studies, George Mason University), Fall 1988: 1, 5-11. Reprinted in Durell Journal of Money and Banking 2, 3, February 1990: 2-20. German translation "Bankfreiheit: Bibliographischer Aufsatz," in Monetary Freedom Network Rundbrief, March 1989; available at <http://www.free.de/geld/schuler.html>. Spanish translation "Banca libre," La Prensa (Buenos Aires), 25 June 1993: 12.
OTHER PUBLICATIONS--SHORT (many are available from me, but the bulk are ephemeral in nature and rarely still worth reading)
"Exchange Rate Regimes." Letter to the editor, Journal of Economic Perspectives 18, 2, Spring 2004: 274-5.
"Argentina's Tax Crisis," with Steve H. Hanke. National Post (Toronto), 27 March 2002: 15. Also published as "Argentina, dinero y moralidad" in Venezuela Analítica (Caracas), 1 April 2002; El Panamá América, 6 April 2002; and El Observador (Montevideo, Uruguay) 10 April 2002. Translated by Carlos Ball (Agencia Interamericana de Prensa Económica).
"Dollarization Still Best Option for Argentina." Latin Business Chronicle (online only), 11 March 2002.
Review of Paul Krugman (ed.) Currency Crises. Economic Affairs (London), 21, 1, March 2001: 62.
"Ecuador Update: A Note on Ecuador's Dollarization Plan," with Joseph Pasetti. Staff note, Office of the Chairman, Joint Economic Committee, U.S. Congress, February 2000.
"Fundamentos de la dolarización" (Basics of Dollarization). Translated by Dora de Ampuero. PYMES (Pequeñas y Medianas Empresas, Revista de la Cámara de la Pequeña Industria del Guayas) 1, 4, July-August 1999: 14-17.
"!Cómo enfrentar la crisis brasileña!" (How to Face Brazil's Crisis). Translated by José Cordeiro. El Universal (Caracas), 10 March 1999.
"¿Una moneda estable necesita un gobierno estable?" (Does a Stable Currency Require a Stable Government?") Translated by José Cordeiro. El Universal (Caracas), 14 January 1999.
"Productores versus consumidores de dinero" (Producers versus Consumers of Money). Translated by José Cordeiro. El Universal (Caracas), 29 December 1998.
"Recent Currency Crises in Emerging Markets and Their Relation to Currency Boards." L'Express (Port Louis, Mauritius), 16 December 1998.
"Integration, Not Isolation, Will Protect Emerging Markets." Asian Wall Street Journal (Hong Kong), 15 December 1998: 10. Also in Wall Street Journal Europe (Brussels), 16 December 1998: 8.
"Currency Boards Can Help Economies in Global Turmoil." L'Express (Port Louis, Mauritius), 9 December 1998.
"Defining the Post-Washington Consensus on Monetary Policy." Transition: The Newsletter About Reforming Economies(World Bank), 9, 5, October 1998: 20-2.
"Crisis cambiaria" (Brazil, the Next Currency Crisis). Translated by Carlos Ball (Agencia Interamericana de Prensa Económica). El Mercurio (Santiago de Chile), 11 October 1998.
"Perils of Central Banking." Moscow Times, 12 September 1998: 8.
"Bolstering Hong Kong's Dollar." Asian Wall Street Journal (Hong Kong), 24 August 1998: 8.
"La moneda y la trampa de los intereses altos" (The High Interest Rate Trap). Translated by José Cordeiro. El Universal(Caracas), 13 August 1998.
"Dolarisasi, sebuah alternatif" (Dollarization, Another Option) and "Peran bank sentral dalam dolarisai" (The Role of the Central Bank in Dollarization). Translated by Her Suharyanto. Bisnis Indonesia (Jakarta), 31 July 1998: 5.
"The Dollar Offers Hope for Indonesia." Asian Wall Street Journal (Hong Kong), 15 July 1998: 6.
"No hay excuses en política monetaria" (No Excuses in Monetary Policy). Translated by José Cordeiro. El Universal(Caracas), 13 June 1998. Reprinted as "En política monetaria no hay excuses." Perfiles del Siglo XXI (Mexico City), no. 81, April 2000: 36-7.
"No More Central Banks." Journal of Commerce, 19 May 1998: 6A.
"Por qué el sucre no es tan bueno como el dólar" (Why the Ecuadorian Sucre is Not as Good as the Dollar). Translated by Dora Rodriguez de Ampuero. El Financiero (Quayaquil, Ecuador), 4 May 1998: 15.
"La moneda: propriedad pública o privada?" (Money: Government or Private Property?) Translated by José Cordeiro. El Universal (Caracas), 16 March 1998: section 1, page 5.
"Stability Drives Recovery." Asian Wall Street Journal (Hong Kong), 16 February 1998: 10. Reprinted as "A Currency Board Beats IMF Rx" in U.S. Wall Street Journal, 18 February 1998: A22.
"Untangling Indonesia's Financial Mess." Business Times (Singapore), 14 February 1998.
"Las crisis cambiarias del futuro" (The Currency Crises in Our Future). Translated by José Cordeiro. El Universal(Caracas), 13 February 1998; also 20 February 1998.
"Sistem dewan mata uang" (The Currency Board System). Translated by Armida Alisjahbana and edited by Bambang Harymurti. Media Indonesia (Jakarta), 7 February 1998: 1, 6; 8 February 1998: 1; 10 February 1998: 1, 6; 11 February 1998: 1, 6; 12 February 1998: 1, 6; 13 February 1998: 1, 6.
"Establish Currency Boards, Now." Asian Wall Street Journal (Hong Kong), 12 January 1998: 8. Also in Indian Express (Bombay), 17 January 1998.
"Wind Without Direction: Why Dollarization is Better than Devaluation" (in Chinese). Translated by Gary Shiu. Next Magazine (Hong Kong) no. 405, 12 December 1997: 2-3.
"Mexico: el mejor camino para el Banco Central" (The Best Path for Mexico's Central Bank). Translated by Carlos Ball (Agencia Agencia Interamericana de Prensa Económica). El Economista (Mexico City), 26 November 1997.
"Tighten the Dollar Link." Asian Wall Street Journal (Hong Kong), 6 November 1997: 10. Reprinted as "Tighten Dollar Link and Hong Kong Can End Speculation" in weekly international edition, 16 November 1997: 16.
"Reform, Not Devaluation, Is Answer to Dollar Crisis." Hong Kong Standard, 27 October 1997: 11.
"S-E Asia Should Go Fixed." Business Times (Singapore), 21 August 1997: 13.
"Fixed Exchange Rates." Letter to the editor, Journal of Economic Perspectives 10, 1, Fall 1996: 202-3.
"The Failure of Central Banking in Developing Countries." The Freeman, April 1995: 215-18.
"Reparando la ranura" (Fixing Mexico's Leaky Roof), with Steve H. Hanke. Translated by Carlos Ball (Agencia Interamericana de Prensa Económica). El Mercurio (Santiago de Chile), 6 January 1995: A2.
"Currency Board to Eliminate Inflation in Russia?" with Steve H. Hanke. Transition (Transition and Macro-Adjustment Division, Policy Research Department, World Bank) 5, 4, April 1994: 4-5.
"Un medicament pentru sanatatea monedei" (A Sound-Money Cure), with Steve H. Hanke. Capital (Bucharest), 8 October 1993: 10.
"Degringolada monedi nationale poate fi oprita" (The Way Out of Monetary Chaos), with Steve H. Hanke. Capital(Bucharest), 1 October 1993: 10.
"How to Halt Russia's Rouble Charade," with Steve H. Hanke. Financial Times, 12 August 1993: 13.
"Rumblings Amid Ruble Roulette," with Steve H. Hanke. Washington Times, 2 August 1993: E1, E4.
"Can the Ruble Be Rescued?" with Steve H. Hanke. Washington Times, 20 May 1993: G1, G4.
"Taming Russia's Money Monster," with Steve H. Hanke. Washington Times, 20 April 1993: F1.
"More Than Money, What Yeltsin Needs Is Inflation Medicine." Baltimore Sun, 18 April 1993.
"A Solution for Yeltsin's Woes?" with Steve H. Hanke. Washington Times, 23 March 1993: F1, F3.
"A Base for Somali Revival," with Steve H. Hanke. Washington Times, 27 January 1993: G3.
"A Currency Board Solution to the Ruble Crisis?" with Steve H. Hanke. Washington Economic Reports (U.S. Information Agency) no. 48, 30 September 1992: 7.
"Clearing the Ruble," with Steve H. Hanke. Reason, March 1992: 44-6.
"Yeltsin's Dilemma," with Steve H. Hanke. Washington Times, 19 February 1992: F3.
"Gold Standard Has a Silver Lining." Letter to the editor, Wall Street Journal, 6 January 1992: A15.
"Currency Convertibility: A Self-Help Blueprint for the Commonwealth of Independent States," with Steve H. Hanke. Cato Institute Foreign Policy Briefing no. 17, 22 January 1992. 13 pp.
"Keynesi abil rubla konverterritavaks" (Keynes and Ruble Convertibility), with Steve H. Hanke and Lars Jonung. Äripäev(Tallinn, Estonia), 17 December 1991: 6.
"Lat Keynes ge Ryssland en ny palitig rubel!" (Let Keynes Give Russia a New Ruble), with Steve H. Hanke and Lars Jonung. Dagens Industri (Stockholm), 2 December 1991: 9.
"Argentina Should Abolish Its Central Bank," with Steve H. Hanke. Wall Street Journal, 25 October 1991: A15.
"What Keynes Would Tell Today's Moscow Reformers," with Steve H. Hanke. International Economy 5, 5, September/October 1991: 28-30.
"For a Convertible Ruble Soviet States Should Create Currency Boards, Not Central Banks," with Steve H. Hanke.Barron's, 16 September 1991: 10.
"The World History of Free Banking." HKCER Letters (Hong Kong Centre for Economic Research), September 1991: 4-5.
"Bizarre Ruble Games," with Steve H. Hanke. Washington Times, 24 June 1991: D3.
"Soviets Need Honest Money, Not Aid," with Steve H. Hanke. Wall Street Journal, 5 June 1991: A12.
"Memo to Gorbachev: 6 Months to Sound Money," with Steve H. Hanke. Baltimore Sun, 5 June 1991: 13A.
"Une éxperience monétaire réussie dans la Russie d'avant-Lénine" (A Successful Monetary Experiment in Pre-Soviet Russia), with Steve H. Hanke. Le Liberal Européen (Paris), mai-juin 1991: 5-6.
"Currency Board System Urged." Durell Journal of Money and Banking 3, 1, February 1991: 30-1.
"Litas nereikalingas is viso" (The Litas Reform Will Fail), joint interview with George Selgin. Permainos, Vilnius, Lithuania, September 1990.
"A 'Keynesian' Cure for the Soviet Economy," with Steve H. Hanke. New York Times, 3 September 1990: 21; International Herald Tribune (Paris), 5 September 1990.
"Keynes and Currency Reform: Some Lessons for Eastern Europe Today," with Steve H. Hanke. Journal of Economic Growth (U.S. Chamber of Commerce) 4, 2, Summer 1990: 10-16. Also published in French and Spanish versions of the same publication.
SELECTED UNPUBLISHED MATERIAL
"How to Dollarize in Argentina Now," with Steve H. Hanke. Cato Institute paper, December 21, 2001. (Unpublished in the sense that it was not part of any formal series that appears in hard copy.) Available at <http://www.cato.org/pubs/papers/schuler-hanke011231.pdf>.
"The Mack Dollarization Plan: An Analysis," with Robert Stein. Paper presented at Federal Reserve Bank of Dallas conference "Dollarization: A Common Currency for the Americas?," 6-7 March 2000. A revised version is available elsewhere on my site.
"The Importance of Being Orthodox." Paper presented at Hong Kong Baptist University International Workshop on Currency Boards, 9 October 1999. Available elsewhere on my site.
"A Survey of Money Markets in Southern Africa." Report written with Dennis Sheets and David Weig of IMCC for Harvard Institute for International Development and U.S. Agency for International Development, November 1997. Available from me, but by now outdated.
"Currency Boards." Ph.D. dissertation, George Mason University, May 1992. Available elsewhere on my site.
"Memorandum on Lithuanian Currency Reform," with George A. Selgin. Proposal submitted to the president and prime minister of Lithuania, November 1990.
Most central banks have poor long-term records: they have not provided currencies that fulfill well the textbook functions of money as a medium of exchange, unit of account, and store of value. For example, no Latin American currency is worth as much in terms of the U.S. dollar today as it was in 1990. The one apparent exception, the Panamanian balboa, is simply what Panamanians call the dollar in their officially dollarized monetary system.
Central banking is central planning in money. The great 20th-century experiment with comprehensive central economic planning behind the Iron Curtain ended in failure. Its experience confirms centuries of earlier experience with limited forms of central planning: price controls, favoritism toward politically privileged sectors of the economy, mercantilism. To me, the repeated failure of central planning in other areas leads naturally to question why we should want central planning in money, and to search for other possible monetary systems. A good way to think about what might work better today is to examine what systems have existed in the past and how they have performed. To that end, I have spent much of my time researching and writing about the three major historical rivals to central banking: free banking, currency boards, and dollarization. Even most economists who specialize in money and banking remain unaware of the extensive history of these systems, their generally good record of providing monetary stability, and the extensive effort that thinkers of the past have made to provide an understanding of at least free banking and currency boards.
A free banking system is one in which money and credit are supplied competitively; ideally, competition extends to the monetary standard itself (gold, silver, a fiat-money inflation-targeting rule, or whatever else competitive issuers may try and consumers may accept). After having been neglected for more than a century among English-speaking economists, free banking has experienced a revival of interest since the Nobel Prize-winning economist Friedrich A. Hayek issued his 1976 monograph Choice in Currency (retitled Denationalisation of Money in a later edition). Hayek's monograph was one of the first things I read on free banking when I became interested in it in the 1980s, after meeting the free banking writers George Selgin and Lawrence H. White. In 1989 I wrote the first comprehensive survey of the history of free banking (published as "The World History of Free Banking," in Kevin Dowd, editor, The Experience of Free Banking, London: Routledge, 1992). Various forms of free banking have existed in about 60 countries, including such major economies as the United States, the United Kingdom, France, Germany, Italy, China, India, Brazil, Mexico, South Africa, Canada, and Australia. I returned to the subject of free banking in the 2001 paper "Note Issue by Banks: A Step toward Free Banking in the United States?" Free banking is in my view the most generally desirable monetary system because it allows for maximum competition and consumer choice.
Because no free banking systems exist at present, though, trying to discuss it with policy makers remains almost impossible. In investigating how free banking systems had eventually been replaced by central banking, I noticed that many countries had established currency boards as intermediate steps. In 1989 there were still a few currency boards in existence, notably in Hong Kong. That year I had the good fortune to receive a summer fellowship to work in Hong Kong for John Greenwood, whose ideas had been largely responsible for Hong Kong's return to the currency board system in 1983. Among the things I did while working for Greenwood was to write an article about Hong Kong's monetary history. Steve Hanke, a professor of economics at Johns Hopkins University, saw the article later that year and contacted me because he was also interested in currency boards. In the summer of 1990 we began a frequent collaboration that has continued to the present. Our first articles were based on archival material I had stumbled across and written up in a graduate school paper a few months before. The material provided evidence of John Maynard Keynes's involvement in establishing the long-forgotten currency board of North Russia in 1918-20, during the Russian civil war.
At about the same time I worked with George Selgin, then as now at the University of Georgia, to devise a currency board proposal for Lithuania. Selgin was familiar with Hong Kong's currency board, having taught at the University of Hong Kong for the 1988-89 academic year. Selgin and I had separately suggested the possibility of establishing a currency board to a group of Lithuanians who visited the United States in March or April 1990 seeking ideas about what to do after Lithuania regained the independence they hoped for. The Lithuanian government invited us to visit, which we did in October 1990. We talked to the president, prime minister, and other officials, and wrote a "Memorandum on Lithuanian Currency Reform" explaining how to establish a currency board. It was, I believe, the first step-by-step explanation applying the idea to an economy in transition from socialism to capitalism, though a few other economists had previously made less detailed suggestions for currency boards in other transition economies. We proposed using the German mark as the anchor currency--something I also did in later articles and a monograph on Lithuania with Steve Hanke. Lithuania initially rejected the idea of a currency board but reconsidered after unhappy experience with central banking. Lithuania adopted a currency board-like system in April 1994. Hanke, who was an adviser to the president at the time, was pushing for a more orthodox system, but the resident IMF official in Lithuania and certain Lithuanians insisted on keeping some features of central banking, so the resulting system was currency board-like rather than an orthodox currency board. The government initially chose the U.S. dollar as the anchor, but in February 2002 it switched to the euro, using the prevailing cross-rate between the dollar and the euro.
From 1990 to 1995 I wrote many articles and some books on currency boards with Hanke. In 1990 we wrote a proposal for orthodox currency boards in Yugoslavia, where Hanke was an adviser to the deputy prime minister, and in late 1990 or very early 1991 we finished a similar proposal for Argentina, where Hanke had business dealings. The Yugoslav proposal bore a kind of belated fruit when Bosnia established a currency board-like system in 1997. The Argentine proposal was not translated into Spanish and published until after the "convertibility" system was established in April 1991, but Hanke met president Carlos Menem and talked to him about our proposal before then. Similar ideas were already in the air but we were unaware of most of them. The economists Aquiles Almansi and Carlos Rodríguez had written a newspaper article in 1989 proposing something close to the convertibility system. Other Argentine economists, including Gabriel Rubinstein and Walter Graziano, had expressed similar ideas; some of them were aware of what had been written before and others were not. In the Argentine Congress, the deputy José Maria Ibarbia was devising a currency board bill. Not by coincidence, his grandfather had been the last president of the Caja de Conversión, a body that had functioned as a currency board on and off early in the 20th century. A think tank connected with Ibarbia published our proposal, entitled ¿Banco central o caja de conversión? Menem and Cavallo were latecomers to the idea, but they were the most important figures for convertibility because they implemented it. The definitive account of the roots of the convertibility system has not yet been written, and some enterprising economist without a personal axe to grind should undertake it while all the major and minor participants are still alive to be interviewed.
From 1991 to 1993 Hanke and I did a considerable amount of work with Lars Jonung, then a professor of economics at the Stockholm School of Economics and for part of the period an economic adviser to the prime minister of Sweden. I believe that Ingemar Stahl, a colleague of Jonung, was the first person to suggest to Estonian officials that they should consider a currency board, in 1991 or perhaps even as early as 1990. Jonung suggested to Hanke and me that the three of us write a monograph to explain how Estonia might establish a currency board. The result was Monetary Reform for a Free Estonia: A Currency Board Solution, published in early 1992 (before the Estonian monetary reform) in English and in an Estonian translation. Hanke visited Estonia in early May 1992 to discuss the currency board idea with Estonian members of parliament, and suggested specific language for a currency board law. He also worked on the issue with influential Estonians who had emigrated to the West and were helping the country of their birth return to a market economy. Under our original proposal, Sweden would have granted Estonia aid to provide much of the initial foreign reserves for an orthodox currency board, which would have been linked to the Swedish krona. (Jonung was at about that time proposing to the Swedish prime minister that Sweden itself should link to the German mark through a currency board, not a central bank.) What actually happened was that Estonia regained title to its pre-World War II gold reserves stored abroad; high inflation by the Soviet/Russian central bank greatly reduced the real value of the rubles Estonians held, making the proposed grant unnecessary; and the Estonians were more inclined to link to the German mark than to the kroner. Estonia established a currency board-like system that began operations in June 1992.
Hanke and I wrote an early proposal for a currency board in Bulgaria in 1991, in connection with a visit Hanke made there along with the economist and businessman Richard Rahn. In 1996 and again in 1997, our book Currency Boards for Developing Countries was published in Bulgarian translation and Hanke became involved as an official adviser in the reform that established Bulgaria's currency board-like system.
My Ph.D. dissertation ("Currency Boards," 1992) examined all the then known historical cases of currency boards and some episodes that had been forgotten. Having surveyed the episodes of free banking and currency boards, I am now doing the same, rather slowly, for dollarization.
Hanke, Jonung, I have stressed the difference between orthodox currency board systems and unorthodox "currency board-like" systems. We advocated orthodox currency boards, but the systems that Argentina, Estonia, Lithuania, Bosnia, and Bulgaria established in the 1990s all had some unorthodox elements we considered undesirable. Only in the case of Argentina have they proved fatal, but they have caused occasional problems in some of the other countries. Currency board-like systems combine potentially contradictory elements of central banking and currency boards. For example, an orthodox currency board holds a minimum of 100 percent in true foreign reserves against its monetary liabilities, and holds no more than 115 percent (more typically 110 percent); the excess above 100 percent is simply a cushion to ensure that reserves do not fall below 100 percent is some of the currency board's assets suffer a loss of value. In contrast, Argentina's currency board-like "convertibility" system had a minimum reserve requirement of 66-2/3 percent and no maximum. Argentina's central bank therefore had some discretionary latitude to alter the monetary base that an orthodox currency board would not have had. Our fellow economists have rarely been aware of such details. (A couple of papers on the site discuss the convertibility system in some detail.)
In "The Problem with Pegged Exchange Rates" (an article written in May 1998 and published in1999), I developed an argument that shows, among other things, the nature of the built-in tension in currency board-like systems. The gist of the argument is that trying to target the exchange rate and the supply of money simultaneously, as currency board-systems can do and in some cases actually have done, slows adjustment of the real supply of money and credit to the real demand. The monetary system sends the wrong signals to the rest of the economy and creates unnecessary disturbances. To the extent they are not orthodox, currency board-like systems have an element of exchange rate pegging, whereas orthodox currency board, dollarization, and most historical cases of free banking have had fixed exchange rates. A recent restatement of this idea occurs in my article "Why Currency Crises Happen" (2002), on this site.
Like free banking or currency boards, official dollarization is a monetary system that has a long history but was neglected by economists for most of the 20th century. Until 1999 there had been many books and articles on unofficial dollarization, but, as far as I know, no books and few articles on official dollarization, the form that most interests me. In our book Russian Currency and Finance: A Currency Board Approach to Reform (1993), Hanke, Jonung and I briefly considered dollarization as a possible monetary system for Russia. We considered it preferable to central banking but thought it had less political chance than a currency board at the time. (And indeed, a currency board has been somewhat seriously considered for Russia on a couple of occasions, while dollarization has not.) In 1995, Hanke and I wrote a monograph for the Private Sector Organisation of Jamaica (Alternative Monetary Regimes for Jamaica) examining options for monetary reform in that country. Among the options we considered was dollarization. In 1995-6 I wrote a monograph comparing the performance of central banking with other monetary systems (Should Developing Countries Have Central Banks? Currency Quality and Monetary Systems in 155 Countries, London: Institute of Economic Affairs, 1996). It was quite simple (some readers would say simplistic), but nobody had ever attempted such a comparison before. In rummaging through the monetary history of the countries involved, I became aware that official dollarization had been more frequent than I had thought.
The effects of the East Asian currency crisis on Indonesia prompted me to write an essay proposing a currency board there in January 1998. As it was being translated into Indonesian, president Suharto contacted Steve Hanke to visit Indonesia and explain how a currency board might be established there. I had no connection with Hanke's efforts, but it happened that an abridged translation of my paper appeared in February, shortly after Hanke's first visit. I visited Indonesia in March and spoke to business and university audiences in favor of a currency board (again, of the orthodox type). Because of pressure from the IMF and the U.S. government, Indonesia did not adopt a currency board, and suffered a terrible depression in 1998. The IMF never produced any detailed analysis of why a currency board would have been bad for Indonesia--an appalling piece of shoddiness.
Also in March 1998, I met the Venezuelan jack of many intellectual trades José Cordeiro and the Panamanian economist Juan Moreno, who were both interested in dollarization. Moreno was then and remains now the economist with the deepest understanding of official dollarization. In response to the criticisms of a currency board in Indonesia, I wrote a paper explaining how Indonesia could dollarize and why dollarization was exempt from many of the criticisms (even though I considered the criticisms mistaken). That paper ("Dollarizing Indonesia") and a paper explaining why Hong Kong should include dollarization as part of its currency board arsenal ("A Contingency Plan for Dollarizing Hong Kong") were, I believe, the first papers, or at least the first recent papers, containing step-by-step proposals of how to dollarize. Both papers are available on the site. In January 1999, Steve Hanke and I wrote a similar paper for Argentina after then-president Carlos Menem stated publicly his interest in dollarization; Hanke presented the paper to Menem personally. Menem continues to advocate dollarization for Argentina today.
In May 1998, my friend Dora de Ampuero, the founder and president of the Ecuatoriano de Economía Política, suggested I write a newspaper article on what might be better for Ecuador than central banking. The article discussed dollarization and an orthodox currency board (not the Argentine-style system that had in fact been proposed by some Argentines who had visited Ecuador to talk with its president of the year before, Abdalá Bucaram.) Dora translated the article and had it published in an Ecuadorean newspaper. Dollarization was not an original idea, but my article appeared at the time a dollarization movement was beginning to stir in Ecuador. The movement's organizers were Dora and Joyce de Ginatta. Dora's institute became the focal point for developing the intellectual case for dollarization, and issued a number of publications to that end, including translations of some papers I wrote. Joyce was president of Capig, the small business chamber of commerce of Guayas province (which includes Guayaquil, Ecuador's main port). She tirelessly gave speeches, organized conferences, and used her extensive contacts--she seems to know everyone in Ecuador--to make business leaders and politicians aware of the dollarization option. Other important figures who were far ahead of the curve in arguing for dollarization were Franciso Zalles (banker and economist), Franklin López (an Ecuadorean-American economist who has taught at universities in both countries), Carlos Julio Emanuel (former president of Ecuador's central bank, later to be economy minister for a time under dollarization), and José Cordeiro (who made a few visits from Venezuela and wrote La segunda muerte de Sucre, a book on economic reform that became a best-seller in Ecuador). I visited Ecuador to give a speech on dollarization at a conference organized by Joyce and Dora in July 1999. By chance, I was also in Ecuador just after its president announced the decision to dollarize on 9 January 2000. I wrote a paper ("Dolarización Oficial en Ecuador") that made many specific suggestions about how to implement dollarization. The government incorporated some of them into practice.
In early 1999 I began working for the then chairman of the Joint Economic Committee of the U.S. Congress, Senator Connie Mack. Senator Mack was interested in the possibility of promoting monetary stability by sharing seigniorage (the profit from issuing dollar currency) with officially dollarized countries. With Robert Stein, who also worked for Senator Mack, we helped the senator draft a bill to share seigniorage, the International Monetary Stability Act. The Act was of particular interest to the Argentine government because in January 1999 president Carlos Menem had raised the possibility of dollarization. In the "Further Reading" file there is more on the Act. Unfortunately, the U.S. Treasury opposed sharing seigniorage. Without U.S. support, official dollarization withered as a political possibility in Argentina. It was an enormous missed opportunity. The cost of not doing so in 1999 was an economic depression, devaluation of the currency, a government freeze on bank deposits, destruction of the financial system, and an economic and social upheaval whose consequences spilled over to Brazil and Uruguay. (Thank you, Robert Rubin and Larry Summers.)
So, what is the relationship among free banking, currency boards, and dollarization? Very briefly, to me, free banking is the ideal system, central banking is farthest from the ideal, and currency boards and dollarization are in-between, useful as stepping-stones from central banking to free banking. I have written about this relationship on a number of occasions; for a brief, easily available explanation, see "Dollarization, at the Intersection of Economics and Politics," which is elsewhere on the site. For more on free banking, see the"Further Reading" file, which you can reach by returning to the