CURRENCY BOARD AGREEMENT AND ITS ROLE INCurrency Board Agreement • August 28th, 2015
Contract Type FiledAugust 28th, 2015A necessary condition for a country's economy to advance is the predictability of the price level. The economic agents should be reasonably certain that the prices tomorrow are comparable with the prices today, or otherwise informed decision-making becomes impossible. It is a basic tenet of modern economics that inflation is usually well correlated with a corresponding increase in the growth rate of money supply (Milton, 1992; Mishkin, 1992; Fischer, Dornbusch & Schmalensee, 1988). Therefore, a simple prescription for reigning over inflation is designing a system, which prevents money supply from uncontrollable increases.