Bank on the Currency Principle

Since 1980, over 130 countries, almost three-quarters of the IMF member countries, have experienced significant money and banking problems. Indeed, most emerging and many developed countries have endured the pain of full-blown financial crises that have, in some cases, required taxpayer-financed bank bailouts equal to 10 to 20% of GDP. The cures offered for emerging economies have, alas, been wide of the mark. The prescriptions would require the emerging economies simply to mimic the money and banking systems in the OECD countries. These cures are wrongheaded in principle, and in practice, they are not feasible. That is why financial crises continue to occur regularly, if not with increased frequency, in emerging economies