This week's In The News looks at the proposed adoption of a currency board by Indonesia. The eight resources discussed explain what a currency board is and enumerate the benefits and costs of adopting a currency board. President Suharto of Indonesia proposed creating a currency board in Indonesia to help solve the current financial crisis that is plaguing the country. However, the International Monetary Fund (IMF), the agency providing $40 billion to Indonesia to help it overcome the financial crisis, is against the idea and threatens to cut off financial aid if the currency board is adopted. At the moment, Indonesia appears to have backed down from the idea, avoiding a confrontation with the IMF. A currency board is a monetary authority that issues notes and coins convertible into a foreign currency (reserve currency) at a fixed rate and on demand. Both Hong Kong and Argentina have successfully adopted a currency board system.
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