Open Access

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

   | Jun 03, 2011

Currency 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.

ISSN:
1840-118X
Language:
English
Publication timeframe:
2 times per year
Journal Subjects:
Business and Economics, Political Economics, other, Business Management