Sterilization Activities and Lender of Last Resort in Recent Currency Board-Like Countries

Abstract

This paper empirically analyses discretionary monetary activities in recent currency board-like countries. In contrast to the previous research, it shows that none of the recent currency board-like countries, except for Argentina, was excessively overusing sterilization activities, when these activities were more precisely defined. In this respect, other currency board arrangements can be considered either as orthodox or unorthodox and differ from the majority of the central banking countries that were investigated. Furthermore, the function of lender of last resort was significantly limited in CEE currency board-like countries as compared to the other monetary arrangements; on the other hand the monetary authorities in Hong Kong and Argentina were comparably active lenders of last resort to the banking sector.