[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-325733-105":59,"doc-detail-325733-en":123},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":116,"head_meta":118,"extra_data":120,"updated_unix":122},105,"en","a-mexican-currency-board","A Mexican Currency Board?","","The text analyzes Mexico’s currency crisis and the credibility problem of achieving durable price stability. It discusses the trade-off between adopting institutional limits that restrict monetary discretion and relying on established reputations for inflation control. Mexico is compared with central banks and with credibility-bearing institutions like the Bundesbank and the Federal Reserve, arguing that a currency board could strengthen confidence through fixed exchange rates and full convertibility. It also outlines proposed institutional structure, reserve backing, and limits on domestic asset acquisition, then examines how monetary quantities would adjust via balance-of-payments dynamics.",{"@graph":69,"@context":115},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/a-mexican-currency-board/325733/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/a-mexican-currency-board/325733.png","ImageObject",300,407,{"name":92,"@type":93},"Riley","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-29","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109],{"name":110,"@type":111,"acceptedAnswer":112},"What economic adjustment mechanism would a currency board change?","Question",{"text":113,"@type":114},"By pegging the exchange rate and eliminating monetary policy discretion, a currency board removes an important mechanism for hastening adjustment to shocks. The monetary stock would instead depend on balance-of-payments outcomes with the United States, expanding with surpluses and contracting with deficits.","Answer","https://schema.org",{"og:url":83,"og:type":117,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":119,"canonical":83},"index,follow",{"doc_id":121,"site_id":62},325733,1790097415,{"code":4,"msg":5,"data":124},{"doc_id":121,"user_id":125,"nickname":92,"user_avatar":126,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":127,"file_id":128,"file_url":129,"file_type":130,"file_size":131,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":132,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":133,"faqs":134,"seo_title":135,"seo_description":67,"update_tm":136,"read_time":137,"preview_page_count":4},1374391975076,"https://ap-avatar.wpscdn.com/avatar/14000253ca4ec9f6853?x-image-process=image/resize,m_fixed,w_180,h_180&k=1783305029341752051","by Owen F.Humpage  \nlack of confidence in the peso'spurchasing power was fundamental toMexico's recent currency crisis andremains central to the nation's convales-cence.In establishing a credible commit-ment to price stability,countries face atrade-off between 1)adopting institu-tional forms that limit their government'sability to generate inflation and 2)relyingon an established reputation for success-fully controlling the price level.Recog-nizing that those countries lacking such areputation must compensate with stronginstitutional limits on their monetary pol-icy discretion,many economists havesuggested that Mexico replace its centralbank with a currency board.  \nTo be sure,Mexico made commendableimprovements in its monetary policiesprior to the latest peso crisis.Moneygrowth and inflation slowed after 1992,and although Mexican inflation re-mained above U.S.inflation,the differ-ential was not increasingly inconsistentwith the official limitation on the peso'sdepreciation(see figures 1-3).²Thesegains,however,were atypical of Mexi-co's broader experience and too currentto constitute a credible reputation,as lastyear's capital flight and subsequent de-valuation illustrated.Without a well-established track record,the newly inde-pendent Bank of Mexico could notpossibly garner the same credibility asthe Bundesbank or the Federal ReserveSystem.  \nCurrency boards,by eliminating mone-tary policy discretion and offering fullcurrency convertibility,give developingcountries a much stronger,more visible  \n# A Mexican Currency Board?\n\narrangement for promoting confidence intheir money than do central banks.Bypegging the exchange rate,however,cur-rency boards eliminate an importantmechanism for hastening an economy'sadjustment to economic shocks.³  \n## ■ Establishing a Currency Board\n\nMexico might split the Bank of Mexicointo an Issuing Department,whichwould act as the currency board,and aseparate Banking Department,whichwould regulate banks and act as thelender of last resort.⁴At the public's ini-tiative,the Issuing Department wouldbuy or sell U.S.dollars against pesos at afixed exchange rate.The Mexican legis-lature would set the exchange rate bylaw.Currency boards invest theirreserves in interest-bearing securities ofthe reserve country—in Mexico's case,U.S.securities—and remit the profits totheir government.They typically hold asmall excessof reserves(5 to 10 per-cent)to provide a buffer against any pos-sible capital loss.  \nSuch an arrangement would guaranteethe full convertibility of the peso mone-tary base into dollars,but it would notunderwrite the entiredomestic moneystock,since currency boards do not backbank deposits.5 To shift wealth frompeso-denominated deposits into dollars,individuals would first have to acquirepesos and then exchange them for dol-lars at the currency board.A Mexicancurrency board would need approxi-mately $9 billion in reserves to fullyunderwrite a monetary base of 50 billionnew pesos at current exchange rates.6  \nMarch 15,1995  \nTo restore faith in the peso's purchas-ing power,Mexico might consider acurrency board.In contrast to a cen-tral bank,a currency board wouldeliminate monetary policy discretionand offer full convertibility of pesosinto dollars.The arrangement would,however,prevent exchange-ratechanges from aiding economicadjustments.  \nUnlike a central bank,the Issuing De-partment would never acquire domesticassets.Among other things,this pre-cludes the Issuing Department frombuying Mexican government debt obli-gations,from lending to state-run indus-tries,or from making loans to localbanks.This crucial prohibition erects awall between the Issuing Departmentand the government's fiscal activities,and also prevents the currency boardfrom engaging in discretionary mone-tary policy.  \nWhile isolating the currency board fromfiscal policy influences,the prohibitionon acquiring government debt appears toconstrain deficit spending in currency-board countries.Under currency boards,Singapore and Hong Kong h","cbCaijydUK5hmONA","https://ap.wps.com/l/cbCaijydUK5hmONA","pdf",1254846,"English","# A Mexican Currency Board?\n## Establishing a Currency Board\n## The Monetary Process","[{\"question\":\"What economic adjustment mechanism would a currency board change?\",\"answer\":\"By pegging the exchange rate and eliminating monetary policy discretion, a currency board removes an important mechanism for hastening adjustment to shocks. The monetary stock would instead depend on balance-of-payments outcomes with the United States, expanding with surpluses and contracting with deficits.\"}]","A Mexican Currency Board? | PDF",1789971275,13]