The Currency Board Monetary System - The Case of Singapore and Hong Kong

Chwee-huay Ow
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Chwee-huay Ow: The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise

No 13, Studies in Applied Economics from The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise

Abstract: This dissertation examines the Currency Board Monetary System in order to provide an explanation for the contrast in economic experience of Singapore and Hong Kong on the one hand and former British colonies which abandoned the system on the other. Two issues are examined in the dissertation. (1)the validity of results of past analyses which led to the abandonment of the Currency Board Monetary System; and (2) the role of the Currency Board Monetary System in Singapore's and Hong Kong's economic growth and monetary stability. To examine the first issue, it reviews the institutions under the Currency Board Monetary System and examines the validity of results of past analyses in the light of subsequent theoretical developments in money supply and balance of payment theories, specifically the endogenous money multiplier theory and the monetary theory of the balance or payments. To examine the second issue, it develops a dynamic monetary model or Singapore's and Hong Kong's Currency Board Monetary System by incorporating a money supply function for a small open developing economy in the monetary model of the balance of payments, The model is then analyzed for its implications for domestic money supply, balance of payments, monetary policy, income growth and monetary stability, Based on the results of the analyses, it makes an assess­ment of the role of the Currency Board Monetary System to Singapore's and Hong Kong's economic growth and monetary stability. It also considers the case for a return to the Currency Board Monetary System by former Currency Board countries as well as countries which have dollarized such as Panama, or those contemplating dollarization such as Israel.

Pages: 215 pages
Date: 2014-03
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