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Currency Boards Missionaries and Converts

and Converts DN Ghosh WHEN in late 1994 the Mexican crisis rang the alarm bells for international fund managers, they targeted the central bank of the country as the villain of the piece. It was well known that the central bank was holding back the inevitable depreciation of the peso at the behest of the ruling political party which was in the midst of an election campaign: the party had understandably little time to think over and take care of the concerns of international fund managers over the sharp erosion in the returns on their capital flows. But their stakes were high. They had in that year financed two-thirds of the current account deficits. Their interests should not have been ignored, at least for the sake of decency, if not gratitude, Several financial and economic commentators were outspoken in pleading their case.

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