Resource title

Outsourcing central banking - Lessons from Estonia

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Resource description

In memory of Vello Vensel, 1941-2004 ; The literature on Currency Boards (CB) stops at the water edge in terms of dealing with the totality of the functions of a central bank. Monetary policy, and banking supervisioncan be "outsourced" in an open economy with substantial foreign direct investment (FDI)in the banking sector if political nationalism does not trump economic rationality. An orthodox CB renders the central banking function redundant in terms of interest rate and exchange rate determination. FDI in banking could perform the same role for the supervisory function of central banks. We use the case of Estonia to illustrate the feasibility of, and constraints on, outsourcing of central bank functions. A brief discussion of the Argentinian experience is used for contrast.Key words: Currency Board, Foreign Banks, Supervision, Regional Integration,outsourcing.

Resource author

Sarkis Joseph Khoury, Clas Wihlborg

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Resource language

eng

Resource content type

application/pdf

Resource resource URL

http://hdl.handle.net/10398/7168

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