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Currency Boards and Dollarization

Author(s):Schuler, Kurt
Reviewer(s):Officer, Lawrence H.

Published by EH.NET (November 2003)

Kurt Schuler, Currency Boards and Dollarization. URL: http://www/ or

Website Review for EH.NET by Lawrence H. Officer, Department of Economics, University of Illinois at Chicago.

The rise of the Internet and the ease of producing websites within it have given self publishing tremendous facility compared to old-fashioned “private printing.” Traditionally some important scholarly works have been privately printed; a good example in economic history is various publications of Thomas Senior Berry, especially regarding U.S. national income. What the Internet has done is to enable individuals (and groups) to disseminate information and commentary both more cheaply and wider than ever before in human history. Also, unlike “hard” publications, there are no limits (lower or upper) on size, and the distinction of pamphlet versus book as well as single-volume versus multiple-volume work vanishes. Further, there is ease in revising and updating websites, quite different from the traditional “later editions” of “hard” books — the latter is low in frequency and inherently a discrete process; the former can be almost continuous.

A scholarly website, such as EH.NET, provides assurance that the information contained within has been subject to some peer review, always by the appropriate editor, sometimes also by scholars that are independent of the author. This procedure enhances the usability of the content of EH.NET. Unfortunately, there is no systematic evaluation of the material in private websites. Yet some such websites could provide valuable material for the scholar, in particular, the economic historian. This review outlines and evaluates one such website. As a website can be a dynamic document, this review applies strictly to the site as of mid-November 2003.

The website, maintained by Kurt Schuler and as “updated June 15, 2003,” contains a large amount of material, some of which warrant welcome by the monetary historian. Kurt Schuler is senior economist in the Office of the Chairman of the Joint Economic Committee of Congress. He has a Ph.D. in Economics from George Mason University and lists a large number of publications (comprising eight single-spaced pages) in the “About me” link, at the bottom of the website. Only a small proportion of the publications appear to be of an academic nature; but it would be unwise for the scholar to be snobbish. There is much of value in the Schuler website. This review will outline the entire site, and highlight material of significance to the economic historian.

The site itself is divided into seven sections. (One can think of this division as corresponding to seven parts of a book, and to the links within each part as individual chapters.) The final section, termed “Miscellaneous,” logically should be the first section. It contains three links: (1) “Purpose of this Web site,” in which Schuler writes: “I established this Web site for the usual reasons: it is about subjects (currency boards and dollarization) that interest me; there was nothing else like it when it started (in 1997); and we all crave attention;” (2) “Copyright notice,” an essential ingredient in any serious website, that provides information on reproducing or printing material on the site; and (3) “About me,” that lists Schuler’s contact information, education, work experience, publications (mentioned above), and “intellectual biography” (that explains Schuler’s interest in free banking, currency boards, and dollarization; and summarizes his practical experience as currency-board advocate). Schuler’s website appears top heavy in currency-board material; but he is careful to point out that, contrary to Kenneth Rogoff’s description of Schuler “as being fanatically pro-currency board,” a currency board is a second-best policy: “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.”

The first section, “Hot topics and new research,” begins with a link “New! Argentina’s Economic Crisis: Causes and Cures” — a Joint Economic Committee document. Here there is a brief summary of Argentine economic history in the nineteenth and twentieth centuries; but the bulk of the study concerns the Argentine depression and crisis at the turn of the twenty-first century. The most valuable part of the website for the economic historian follows, under the heading “New! Tables of Modern Monetary Systems: Africa.” There are four links. The first is an “essay” on African monetary history, titled “Monetary Institutions and Underdevelopment: History and Prescriptions for Africa,” which includes a good summary of monetary history with a useful bibliography. The second link, “explanation” of the tables and titled “Tables of Modern Monetary Systems — Explanation,” provides a detailed guide to the country tables in “country listings,” the third link, and contains a bibliography. The “country listings” are most valuable to the historian. The listings are a country-by-country monetary history, with attention also to political history. Both the internal (“monetary-authorities” table) and external (exchange-rate arrangement” table) monetary systems of each country are covered, with beginning and ending dates for each specific situation. This link runs to 513 pages! The fourth link, “references and tables,” leads to a much shorter document (only 17 pages) titled “Tables of Modern Monetary History: Africa, References and Tables.” A useful bibliography is followed by three summary tables (actually, two are lists) for the countries.

This reviewer in his own work will be making good use of Schuler’s tables for Africa. Schuler mentions on his main page that the African material is but “the first installment in a planned worldwide compilation of basic institutional information on the history of national monetary systems.” Asia is next, but the planned date of August or September 2003 was not fulfilled. One looks forward to the Asian documents. Schuler is to be commended for tackling first the continents on which monetary historians have concentrated less compared to Europe and the Americas.

Still within the first section, “St. Helena” is a link to a reprinted article by Steve Hanke and Matt Sekerke — a short monetary history culminating in a currency board. Finally, clicking on an “essay” on dollarization results in a study “The ABC of Dollarization,” by Carlos Encinas-Ferrer. Users of the website should be cautioned that in this essay, and in fact throughout the site, “dollarization” is a generic term often used in the broad sense to mean (quoting Schuler) “official use of a [meaning any] currency issued in a foreign country.”

The second section, “Currency boards-general material,” begins with the link “Introduction to Currency Boards,” that lists the present-day (as of June 2002) currency boards and provides the beginning date of same. “Currency Boards for Developing Countries: A Handbook” is an 81-page document, again including a bibliography and some history. After a link offering to sell a book, Schuler provides his Ph.D. dissertation, “Currency Boards,” much of which is a history of currency boards, with a bibliography, of course. The link “Further Reading” includes useful links to websites of currency boards and currency board-like systems and of monetary authorities in dollarized countries. A link “Currency Board Bibliography” begins with lists of writings of Schuler and Steve Hanke but then lists currency-board publications, which are divided into 1992 2001 and prior to 1992. The complete bibliography is 100 pages long, though in larger-than-normal font. Finally, there is a link describing a wager on the performance of currency boards versus central banking.

The third section is “Currency boards-country proposals.” There are separate links for Hong Kong, Indonesia, Jamaica, Eastern Europe (in French), and Russia (available by purchase). The fourth section, “Dollarization-general material,” has six links, the most useful of which are a “Table of Dollarized Countries as of June 2002″ and a bibliography. The fifth section, “Dollarization-country proposals,” has links “Argentina,” “Hong Kong,” “Indonesia,” and “Ecuador” (English and Spanish). The sixth section, “Material on related topics” includes, among other material, some short but useful material for graduate students: a reading list in monetary economics and a guide to research in economics (including a brief paragraph on the Internet).

All in all, Kurt Schuler offers a mass of information for the economic historian and the specialist in monetary/international economics. Though some may not accept Schuler’s viewpoints regarding free banking, currency boards, and “dollarization,” the historical tabular material appears to be policy-judgment free. In general, Schuler has set a standard against which other producers of private scholarly websites will have to measure themselves.

Lawrence H. Officer is Professor of Economics at the University of Illinois at Chicago. As Editor, Special Projects, EH.Net, he has recently completed “What Was the UK GDP Then?” which is available on the EH.Net website.

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII