Currency boards: traditional, modern and virtual

Currency boards are a strong form of fixed exchange rate regime where all currency on issue is fully backed by assets denominated in the anchor currency. This paper distinguishes three kinds. The traditional form originated in the 19th century and were common in colonies. While generally successful, most were replaced by central banks. Modern currency boards, notably Hong Kong, are operated by institutions resembling central banks in sophisticated financial systems. Virtual currency boards, such as Libra, are private institutions issuing a type of cryptocurrency known as ‘asset backed stablecoins’. All face a challenge from extraordinarily low interest rates.