Reforms in exchange rate arrangements: is there a case for a currency board in Vanuatu?

Abstract

A recent study by the Asian Development Bank of public sector reform implementation in the Pacific islands recommended investigating the possibility of adopting a currency board arrangement (CBA) for Vanuatu, replacing the existing pegged exchange rate system. It appears that the recommendation has been made on the grounds that the country?s capacity for monetary management was weak and it needed institutional strengthening. This paper reviews the evidence and concludes there is not a case for a currency board arrangement in Vanuatu at present. Show more