Teeth for the Bulgarian Lev: A Currency Board Solution

Bulgaria needs to give its monetary reform instant credibility, to avoid the dangers of continuing inflation on the one hand and depression on the other. A fixed exchange rate system with a central bank always fails. There is, however, one proven system that will successfully maintain a fixed exchange rate - the currency board system. To establish monetary confidence in the Lev, Bulgaria should replace its central bank with a currency board. A currency 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.