A Currency Board Solution for the Albanian Lek

Abstract

To have a stable currency, Albania needs to avoid both foreign political influences on its monetary policy, as under National Bank of Albania, and domestic political influences, as under the State Bank of Albania. It needs to remove monetary policy from political influence. Albania needs to give its monetary reform instant credibility, to avoid the dangers of continuing inflation on the one hand and depression on the other hand. The best way to do so is to strip the State Bank of Albania its currency issuing functions, and to establish a currency board, whose only job will be to issue a convertible currency according to strictly defined rules. A currency board is explicitly designed to maintain a fixed exchange rate. A board is easy to establish and operate, and it has worked successfully time and time again. Indeed, currency boards have always been able to maintain fixed-rate currency convertibility, even during the most trying times.

Keywords: Steve, Hanke, Kurt, Schuler, Currency, Board, Solution, Albania, International, Freedom, Foundation