Currency Board for Mexico

A sound currency is a necessary, but not sufficient, condition for the establishment of a stable government and the promotion of economic prosperity. This theme has been sounded over and over again by virtually all great economists in positions of influence. To take but one example, consider Carl Menger (1840-1921), founder of the Austrian School of Economics. In 1876, Professor Menger became the economics tutor of Crown Prince Rudolf of Austria. Fortunately, the Crown Prince's notebooks have recently been published (Streissler and Streissler, 1994), and this is some of what the Crown Prince learned about currency and credit: “To a large extent, trade and commerce, the pillars and mainspring of all economic development, are founded upon a well-established and orderly monetary system. Fluctuations in the exchange rate and uncertainty in all calculations will therefore shake the prosperity of the state to its very foundation; in their activities at home and abroad the state as a whole and each individual citizen will encounter distrust and obstacles everywhere... Therefore, it can reasonably be agreed that an uncertain, disorderly currency is a vital deficiency of a state, because it makes itself deeply felt in all of economic life and its progress” (p. 141)