ON EXTENDING THE CURRENCY BOARD PRINCIPLE IN BULGARIA: LONG LIVE THE CURRENCY BOARD

Steve H. Hanke and Todor Tanev
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Steve H. Hanke: The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise
Todor Tanev: The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise

No 140, Studies in Applied Economics from The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise

Abstract: The year 1997 was both the worst and best of years for Bulgaria. The year started badly. In February, Bulgaria’s hyperinflation peaked at the fantastic rate of 242% per month (Hanke and Krus, 2013). Then, things dramatically changed for the better. On July 1st, a currency board law was adopted, and the Bulgarian National Bank (BNB), specifically its Issue Department, began to operate under currency board rules. These rules required the lev to be fully backed by Deutschemark reserves (now euro reserves) and to freely trade at a fixed exchange rate with the Deutschmark (Hanke, 2016). With that, the lev became a clone of the Deutschmark, and good news followed.

Pages: 10 pages
Date: 2019-11
New Economics Papers: this item is included in nep-his
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