Comments on: Too many currencies? Or too many dollar pegs? http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/ Thu, 14 Oct 2010 13:09:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Puma http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83837 Puma Thu, 19 Oct 2006 14:03:49 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83837 Just dropping by to tell you I really agree with your view on Dollarization. As an Argentinian that saw the collapse of our economy thanks to twenty years of "free market" policies (starting with the 1976-83 dictatorship and another row with the 1989-2001 Menem and De La Rua governments), I really want other countries to LEARN FROM OUR EXAMPLE. Argentina followed every little policy recommendation from the US and the IMF, we pegged the peso to the dollar, lowered our tariffs, wide-opened our market to foreign imports, privatized every government enterprise on sight and the results were the obvious ones: *Lack of tariffs destroyed our national industry, that could not compete with the cheap multinational imports (Dutch butter was cheaper than the national brand!) *Economic deregulation, combined with the massive privatizations, ravaged the quality of life and allowed corporations to get away with all kinds of crap. Aerolineas Argentinas, after privatization, went from being one of the world's best airlines and having more than 18 planes, to a bankrupt airline that only owned one plane and was leasing the rest of 'em. Iberia, the spanish buyers, transfered all their companies' debts to Aerolineas. Telecom and Telefonica, the two companies that took over our phone service, begun to charge people per-minute-spoken, rather than a fixed price as it's done the rest of the world. Examples like these are tons. *The infamous currency peg only served to create a financial bubble that weakened our capacity to export products, and allowed argentines to travel abroad and act arrogantly while our economy was being destroyed. The day the bubble broke, all hell broke loose. *Privatized oil and energy companies refused to invest on new gas explorations, and there were little resources for the state to force them to do so. We are now in danger of an energy shortage, due to 10 years with no investment, and the new government was forced to create a new state oil company from scratch. *Privatized railroads closed "unprofitable" lines, creating ghost towns and destroying our internal market. The end result of all this was the ravagin of our economy and living standards (one rivalring those in europe), our country joining the list of the most socially unequal ones, weakened education and health systems, and the final blow in 2001 which caused massive riots that forced the crooked government out. The world should learn from our example! What Bush is doing in the US right now is exactly what Menem did over here: Massive market liberalization, cheap Chinese imports, a huge trade deficit, financial and housing bubbles, factories closing to move their production to the third world, increasing social inequality and deregulation. It can only end in a disaster. The problem is, being the US such an important part of the world economy, the effects of an US crash would be devastating, specially for the western world. I bet the Chinese are laughing all the way to the bank. PS: Posted again because my previous comment got somehow stickied with the one from the idiot that posted all those links. Just dropping by to tell you I really agree with your view on Dollarization.
As an Argentinian that saw the collapse of our economy thanks to twenty years of “free market” policies (starting with the 1976-83 dictatorship and another row with the 1989-2001 Menem and De La Rua governments), I really want other countries to LEARN FROM OUR EXAMPLE.
Argentina followed every little policy recommendation from the US and the IMF, we pegged the peso to the dollar, lowered our tariffs, wide-opened our market to foreign imports, privatized every government enterprise on sight and the results were the obvious ones:
*Lack of tariffs destroyed our national industry, that could not compete with the cheap multinational imports (Dutch butter was cheaper than the national brand!)
*Economic deregulation, combined with the massive privatizations, ravaged the quality of life and allowed corporations to get away with all kinds of crap. Aerolineas Argentinas, after privatization, went from being one of the world’s best airlines and having more than 18 planes, to a bankrupt airline that only owned one plane and was leasing the rest of ‘em. Iberia, the spanish buyers, transfered all their companies’ debts to Aerolineas.
Telecom and Telefonica, the two companies that took over our phone service, begun to charge people per-minute-spoken, rather than a fixed price as it’s done the rest of the world. Examples like these are tons.
*The infamous currency peg only served to create a financial bubble that weakened our capacity to export products, and allowed argentines to travel abroad and act arrogantly while our economy was being destroyed. The day the bubble broke, all hell broke loose.
*Privatized oil and energy companies refused to invest on new gas explorations, and there were little resources for the state to force them to do so. We are now in danger of an energy shortage, due to 10 years with no investment, and the new government was forced to create a new state oil company from scratch.
*Privatized railroads closed “unprofitable” lines, creating ghost towns and destroying our internal market.

The end result of all this was the ravagin of our economy and living standards (one rivalring those in europe), our country joining the list of the most socially unequal ones, weakened education and health systems, and the final blow in 2001 which caused massive riots that forced the crooked government out.

The world should learn from our example! What Bush is doing in the US right now is exactly what Menem did over here: Massive market liberalization, cheap Chinese imports, a huge trade deficit, financial and housing bubbles, factories closing to move their production to the third world, increasing social inequality and deregulation.
It can only end in a disaster.
The problem is, being the US such an important part of the world economy, the effects of an US crash would be devastating, specially for the western world. I bet the Chinese are laughing all the way to the bank.

PS: Posted again because my previous comment got somehow stickied with the one from the idiot that posted all those links.

]]> By: Puma http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83836 Puma Thu, 19 Oct 2006 13:59:22 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83836 Just dropping by to tell you I really agree with your view on Dollarization. As an Argentinian that saw the collapse of our economy thanks to twenty years of "free market" policies (starting with the 1976-83 dictatorship and another row with the 1989-2001 Menem and De La Rua governments), I really want other countries to LEARN FROM OUR EXAMPLE. Argentina followed every little policy recommendation from the US and the IMF, we pegged the peso to the dollar, lowered our tariffs, wide-opened our market to foreign imports, privatized every government enterprise on sight and the results were the obvious ones: *Lack of tariffs destroyed our national industry, that could not compete with the cheap multinational imports (Dutch butter was cheaper than the national brand!) *Economic deregulation, combined with the massive privatizations, ravaged the quality of life and allowed corporations to get away with all kinds of crap. Aerolineas Argentinas, after privatization, went from being one of the world's best airlines and having more than 18 planes, to a bankrupt airline that only owned one plane and was leasing the rest of 'em. Iberia, the spanish buyers, transfered all their companies' debts to Aerolineas. Telecom and Telefonica, the two companies that took over our phone service, begun to charge people per-minute-spoken, rather than a fixed price as it's done the rest of the world. Examples like these are tons. *The infamous currency peg only served to create a financial bubble that weakened our capacity to export products, and allowed argentines to travel abroad and act arrogantly while our economy was being destroyed. The day the bubble broke, all hell broke loose. *Privatized oil and energy companies refused to invest on new gas explorations, and there were little resources for the state to force them to do so. We are now in danger of an energy shortage, due to 10 years with no investment, and the new government was forced to create a new state oil company from scratch. *Privatized railroads closed "unprofitable" lines, creating ghost towns and destroying our internal market. The end result of all this was the ravagin of our economy and living standards (one rivalring those in europe), our country joining the list of the most socially unequal ones, weakened education and health systems, and the final blow in 2001 which caused massive riots that forced the crooked government out. The world should learn from our example! What Bush is doing in the US right now is exactly what Menem did over here: Massive market liberalization, cheap Chinese imports, a huge trade deficit, financial and housing bubbles, factories closing to move their production to the third world, increasing social inequality and deregulation. It can only end in a disaster. The problem is, being the US such an important part of the world economy, the effects of an US crash would be devastating, specially for the western world. I bet the Chinese are laughing all the way to the bank. Just dropping by to tell you I really agree with your view on Dollarization.
As an Argentinian that saw the collapse of our economy thanks to twenty years of “free market” policies (starting with the 1976-83 dictatorship and another row with the 1989-2001 Menem and De La Rua governments), I really want other countries to LEARN FROM OUR EXAMPLE.
Argentina followed every little policy recommendation from the US and the IMF, we pegged the peso to the dollar, lowered our tariffs, wide-opened our market to foreign imports, privatized every government enterprise on sight and the results were the obvious ones:
*Lack of tariffs destroyed our national industry, that could not compete with the cheap multinational imports (Dutch butter was cheaper than the national brand!)
*Economic deregulation, combined with the massive privatizations, ravaged the quality of life and allowed corporations to get away with all kinds of crap. Aerolineas Argentinas, after privatization, went from being one of the world’s best airlines and having more than 18 planes, to a bankrupt airline that only owned one plane and was leasing the rest of ‘em. Iberia, the spanish buyers, transfered all their companies’ debts to Aerolineas.
Telecom and Telefonica, the two companies that took over our phone service, begun to charge people per-minute-spoken, rather than a fixed price as it’s done the rest of the world. Examples like these are tons.
*The infamous currency peg only served to create a financial bubble that weakened our capacity to export products, and allowed argentines to travel abroad and act arrogantly while our economy was being destroyed. The day the bubble broke, all hell broke loose.
*Privatized oil and energy companies refused to invest on new gas explorations, and there were little resources for the state to force them to do so. We are now in danger of an energy shortage, due to 10 years with no investment, and the new government was forced to create a new state oil company from scratch.
*Privatized railroads closed “unprofitable” lines, creating ghost towns and destroying our internal market.

The end result of all this was the ravagin of our economy and living standards (one rivalring those in europe), our country joining the list of the most socially unequal ones, weakened education and health systems, and the final blow in 2001 which caused massive riots that forced the crooked government out.

The world should learn from our example! What Bush is doing in the US right now is exactly what Menem did over here: Massive market liberalization, cheap Chinese imports, a huge trade deficit, financial and housing bubbles, factories closing to move their production to the third world, increasing social inequality and deregulation.
It can only end in a disaster.
The problem is, being the US such an important part of the world economy, the effects of an US crash would be devastating, specially for the western world. I bet the Chinese are laughing all the way to the bank.

]]> By: Pedro Romero Aleman http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83834 Pedro Romero Aleman Mon, 30 Jan 2006 16:15:16 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83834 Brad; I think that we disagree more on the prognosis rather than on the diagnosis of the current situation in Ecuador. I would like to remind to all readers of this blog that the flip side of the rampant inflation (in sucres >100%) in Ecuador during 98/99 years was the deflation (in dollars 40%). What I want to highlight is that the continuous devaluatory policies of the government were confiscating time and again people's income. Now, after dollarization, the government is unable to keep doing that, and only has taxes, debt, and I'd say royalties from owned-enterprises, as financial sources. These are more direct measures than inflationary policies. Before dollarization businessmen were used to profits of two till three digits percent, now they speak of one digit percent net profits, so they are more worried about reducing costs through productivity improvements. However, there are still important prices controlled by the governtment, eg gas, causing micro distortions that emerge as macro problems (what you mention about terms of trade). I ain't saying that the BCE lacked qualified personell to do their job, but the real problem is they are immersed into a struggle for poitical power and vested interests that they contribute to keep alive. that's one of my main reasons to distrust in domestic monetary policies in countries like Ecuador. Brad; I think that we disagree more on the prognosis rather than on the diagnosis of the current situation in Ecuador. I would like to remind to all readers of this blog that the flip side of the rampant inflation (in sucres >100%) in Ecuador during 98/99 years was the deflation (in dollars 40%). What I want to highlight is that the continuous devaluatory policies of the government were confiscating time and again people’s income. Now, after dollarization, the government is unable to keep doing that, and only has taxes, debt, and I’d say royalties from owned-enterprises, as financial sources. These are more direct measures than inflationary policies.
Before dollarization businessmen were used to profits of two till three digits percent, now they speak of one digit percent net profits, so they are more worried about reducing costs through productivity improvements. However, there are still important prices controlled by the governtment, eg gas, causing micro distortions that emerge as macro problems (what you mention about terms of trade).
I ain’t saying that the BCE lacked qualified personell to do their job, but the real problem is they are immersed into a struggle for poitical power and vested interests that they contribute to keep alive. that’s one of my main reasons to distrust in domestic monetary policies in countries like Ecuador.

]]> By: bsetser http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83833 bsetser Mon, 30 Jan 2006 10:14:36 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83833 Mr. Aleman -- I am not 100% up to date with all developments in Ecuador, but I am reasonably familiar with the country -- i spent a lot of time thinking about it 98/99. I disagree somewhat with your analysis. No doubt there was a ton of monetary induced volatility in 98/99, impart because of the government's response to problems in the banking sector. Printing sucres had rather predictable consequences. But it is possible for emerging economies to operate a monetary policy that is not based on running the printing presses. While the movements in the sucre during the crisis were no doubt excessive, i also believe that it was necessary for the relative prices of tradables and non-tradables to shift (and for imported tradables to become more expensive)? Why -- because Ecuador got hit with a huge terms of trade shock when oil fell to $15 (particularly since I gather shrimp production was hit by el nino and banana prices were in the doldrums). A real adjustment was necessary. I consequently add another item to your list of macroeconomic problems -- managing volatility in the dollar/ oil price, and terms of trade shocks. As i argued above, Ecuador's real exchange rate will need to fall (as will imports) if oil prices fall, but without the exchange rate, the necessary adjustment will come through deflation. And high nominal dollar interest rates (as if the case in Ecuador now) and falling prices can generate very high real interest rates. See Argentina 2000-01. Anonymous -- I recommend Ricardo Hausmann's more critical assessment of the impact of dollarization on El Salvador's economy. I am not opposed to dollarization in El Salvador's case, given the remittance flow. But it probably does make adjusting to the China shock a bit harder. Hausmann argues real rates in El Salvador are low b/c demand for capital is low. And the Ecuador case proves that it takes more than just dollarization to lower real interest rates. Dollarization does not eliminate default risk. fortunately, that isn't a major concern for el salvador, unlike ecuador. Mr. Aleman — I am not 100% up to date with all developments in Ecuador, but I am reasonably familiar with the country — i spent a lot of time thinking about it 98/99. I disagree somewhat with your analysis. No doubt there was a ton of monetary induced volatility in 98/99, impart because of the government’s response to problems in the banking sector. Printing sucres had rather predictable consequences. But it is possible for emerging economies to operate a monetary policy that is not based on running the printing presses.

While the movements in the sucre during the crisis were no doubt excessive, i also believe that it was necessary for the relative prices of tradables and non-tradables to shift (and for imported tradables to become more expensive)? Why — because Ecuador got hit with a huge terms of trade shock when oil fell to $15 (particularly since I gather shrimp production was hit by el nino and banana prices were in the doldrums). A real adjustment was necessary.

I consequently add another item to your list of macroeconomic problems — managing volatility in the dollar/ oil price, and terms of trade shocks. As i argued above, Ecuador’s real exchange rate will need to fall (as will imports) if oil prices fall, but without the exchange rate, the necessary adjustment will come through deflation. And high nominal dollar interest rates (as if the case in Ecuador now) and falling prices can generate very high real interest rates. See Argentina 2000-01.

Anonymous — I recommend Ricardo Hausmann’s more critical assessment of the impact of dollarization on El Salvador’s economy. I am not opposed to dollarization in El Salvador’s case, given the remittance flow. But it probably does make adjusting to the China shock a bit harder. Hausmann argues real rates in El Salvador are low b/c demand for capital is low. And the Ecuador case proves that it takes more than just dollarization to lower real interest rates. Dollarization does not eliminate default risk. fortunately, that isn’t a major concern for el salvador, unlike ecuador.

]]> By: Anonymous http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83832 Anonymous Mon, 30 Jan 2006 08:39:40 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83832 The effect of dollarization in El Salvador has been a dramatic reduction in interest rates, making the real estate market function much more effectively and making it easier to get capital to start a business. Dollarization has also allowed more effective remittances and trade from the U.S. to El Salvador. It has not been a miracle, but at least you can say that investments in El Salvador will not be at such a great risk of inflation as in many other Latin American countries that run their own currency. That is what dollarization is - a bet that the Fed will be better at fighting inflation than your democratic government. Taking the macroeconomic decisions out of the equation leaves the government with other things to concentrate on, like improving economic freedom and rule of law to grow the economy. The effect of dollarization in El Salvador has been a dramatic reduction in interest rates, making the real estate market function much more effectively and making it easier to get capital to start a business.

Dollarization has also allowed more effective remittances and trade from the U.S. to El Salvador.

It has not been a miracle, but at least you can say that investments in El Salvador will not be at such a great risk of inflation as in many other Latin American countries that run their own currency.

That is what dollarization is – a bet that the Fed will be better at fighting inflation than your democratic government. Taking the macroeconomic decisions out of the equation leaves the government with other things to concentrate on, like improving economic freedom and rule of law to grow the economy.

]]> By: Pedro Romero Aleman http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83831 Pedro Romero Aleman Sun, 29 Jan 2006 10:32:23 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83831 All of you have analyzing dollarization only from a macro perspective. Back in 1998-99 more than ever ecuadorians couldn't make monetary calculations without devaluation risk like you do, then and now. Even small transactions implied make adjustments for Sucre devaluation. Businessmen and even lower-wage-earners changed their sucres to dollars as soon as they got new income. This behavior of economic agents, in the Ecuadorian case gave rise to the process of spontaneous dollarization of the economy that preceded formal dollarization adopted by Jamil Mahuad in January of 2000. The spontaneous process of dollarization was a sign of rejection by Ecuadorians to the monetary policy of BCE and the government. The BCE promoted this economic behavior of individuals by its detrimental role in the determination of the country's monetary supply, due to the struggle among pressure groups. Even macroeconomically you forget to make an analysis about tradable and non-tradables prices, the situation pre-dollarization was that non-tradables prices were plummeting everyday and import goods were not affordable. Now the situation has reversed. And lower-wage-earners are not willing to give their dollars to the government (real state sector has been growing steadily last years). Now, for the firts time in more than 30 years, there is price stability and monetary credibility in Ecuador. All other remaining problems are fiscal and real in Ecuador, and the dollarization helped to call attention on them, there is no veil now only political stubbornness. high oil prices have helped to the ecuadorian government to postpone reforms, but most of ecuadorians do not get any dime from these fiscal revenue. in fact, they pay higher prices for oil derivatives for an oil-producer country due to the nationalization of its production. Interest rates are equal to US levels due to the lack of competition in the banking industry and barriers to entry, but the dollar has done possible for the few active bankers to earn profits. If you have questions about facts and public policy matters in Ecuador, I will be glad to help you as you wish. All of you have analyzing dollarization only from a macro perspective. Back in 1998-99 more than ever ecuadorians couldn’t make monetary calculations without devaluation risk like you do, then and now. Even small transactions implied make adjustments for Sucre devaluation. Businessmen and even lower-wage-earners changed their sucres to dollars as soon as they got new income. This behavior of economic agents, in the Ecuadorian case gave rise to the process of spontaneous dollarization of the economy that preceded formal dollarization adopted by Jamil Mahuad in January of 2000. The spontaneous process of dollarization was a sign of rejection by Ecuadorians to the monetary policy of BCE and the government.
The BCE promoted this economic behavior of individuals by its detrimental role in the determination of the country’s monetary supply, due to the struggle among pressure groups.
Even macroeconomically you forget to make an analysis about tradable and non-tradables prices, the situation pre-dollarization was that non-tradables prices were plummeting everyday and import goods were not affordable. Now the situation has reversed. And lower-wage-earners are not willing to give their dollars to the government (real state sector has been growing steadily last years). Now, for the firts time in more than 30 years, there is price stability and monetary credibility in Ecuador. All other remaining problems are fiscal and real in Ecuador, and the dollarization helped to call attention on them, there is no veil now only political stubbornness.
high oil prices have helped to the ecuadorian government to postpone reforms, but most of ecuadorians do not get any dime from these fiscal revenue. in fact, they pay higher prices for oil derivatives for an oil-producer country due to the nationalization of its production.
Interest rates are equal to US levels due to the lack of competition in the banking industry and barriers to entry, but the dollar has done possible for the few active bankers to earn profits.
If you have questions about facts and public policy matters in Ecuador, I will be glad to help you as you wish.

]]> By: DOR http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83830 DOR Tue, 24 Jan 2006 17:28:10 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83830 Steven M, The websites you cite are anti-consumer groups that wants to raise taxes on poor families to pay for the unwillingness of Corporate America to invest enough to stay competitive. Sorry, I'm not interested in supporting whacko right wingnut protectionist flag wavers. . Steven M,

The websites you cite are anti-consumer groups that wants to raise taxes on poor families to pay for the unwillingness of Corporate America to invest enough to stay competitive.

Sorry, I’m not interested in supporting whacko right wingnut protectionist flag wavers.
.

]]> By: Joe Rotger http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83829 Joe Rotger Tue, 24 Jan 2006 16:47:27 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83829 Dollarization?? You mean everybody in the world gives the US the right to print their money? and with those USDs they can buy anything? Listen, if you buy that, then I've got a nice little bridge called the Brooklyn bridge and I'm selling it... Or, why not take this here paper money I print in my garage in exchange for your stuff? Any country that dollarizes deserves to bear the consequences. On the other hand, a global currency controlled by a UN chartered bank or such... I don't know, it's somewhere in the future. Paretto and Nash say so. But, I don't think the US and European community are going to give up so soon the power of being the defacto standards as currency goes... The Brits didn't give away the £ so easily... I'm sure the PBoC will explain better than I how the USD benefits the US... It's in the billions... Anyhow, great question, thanks Brad. I haven't given up on someday finding a good answer for the exchange rates issue. Dollarization??

You mean everybody in the world gives the US the right to print their money?

and with those USDs they can buy anything?

Listen, if you buy that, then I’ve got a nice little bridge called the Brooklyn bridge and I’m selling it…

Or, why not take this here paper money I print in my garage in exchange for your stuff?

Any country that dollarizes deserves to bear the consequences.

On the other hand, a global currency controlled by a UN chartered bank or such… I don’t know, it’s somewhere in the future. Paretto and Nash say so.

But, I don’t think the US and European community are going to give up so soon the power of being the defacto standards as currency goes…

The Brits didn’t give away the £ so easily…

I’m sure the PBoC will explain better than I how the USD benefits the US…

It’s in the billions…

Anyhow, great question, thanks Brad.

I haven’t given up on someday finding a good answer for the exchange rates issue.

]]> By: Steven M http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83828 Steven M Tue, 24 Jan 2006 05:45:56 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83828 Folks, I totally agree with you. It's about time to get involved. Here are two groups I found. I am not actually part of these groups, but I just wanted to provide examples of groups which may or may not have something to add. If anyone has others, please feel free to mention them. Thanks. http://www.americaneconomicalert.org http://www.economyincrisis.org/ Folks, I totally agree with you. It’s about time to get involved. Here are two groups I found. I am not actually part of these groups, but I just wanted to provide examples of groups which may or may not have something to add. If anyone has others, please feel free to mention them. Thanks.

http://www.americaneconomicalert.org

http://www.economyincrisis.org/

]]> By: DOR http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83827 DOR Tue, 24 Jan 2006 05:11:57 +0000 http://blogs.cfr.org/setser/2006/01/22/too-many-currencies-or-too-many-dollar-pegs/#comment-83827 DF, Hong Kong's short term debt is all trade related, and overnight rates shot up to high double digits during the Asian Financial Crisis, exactly the way the currency board was supposed to work. DF,
Hong Kong’s short term debt is all trade related, and overnight rates shot up to high double digits during the Asian Financial Crisis, exactly the way the currency board was supposed to work.

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