In contrast to central banks, currency boards are rule-bound monetary institutions without discretionary monetary policies. Currency boards first appeared in the mid-nineteenth century, were widespread prior to World War II, were replaced by central banks after the war, and have made something of a resurgence in the 1990s. This article discusses the distinguishing features of currency boards and central banks. Data that compare the performance of currency boards to that of central banks are presented. The arguments against currency boards are itemized and evaluated. The article concludes that the opposition to currency boards ignores the empirical evidence and is, at best, half baked. In developing countries, currency boards are superior to central banks. By applying a remediableness criterion, the article concludes that there are more than sixty countries that should replace their central banks with currency boards.
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