Abstract
The distinctive features of currency boards that were first established in British colonies in the second half of the nineteenth century included their issue of local coin and notes at a fixed exchange rate with a foreign money, usually British sterling. Currency boards held reserves equal to at least 100 percent of their currency liabilities, some in the form of interest-bearing assets denominated in the foreign money, on which they earned seigniorage. The currency-board system was adopted in many colonies and some noncolonial territories during this century until post-World War II decades, when newly independent countries replaced the system with central banks. Hong kong and Singapore were exceptions. This paper offers possible reasons for these developments and discusses the recent interest in establishing currency boards in the former Soviet Union.
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