Hanke had a letter in the Financial Times the other day, which the FT headed "Mexico needs a currency board." He says the interview published several days earlier with the deputy gov of the Bank of Mexico, in which he resisted a board for Mexico, "shows us just how confused and misinformed the Mexican officials are about exchange rates." This was once - like 8 months ago - universally portrayed as the slickest set of technocrats in the "developing" world. A currency board, says Hanke, would bring immediate credibility. Isn't a currency board the functional equivalent of a gold standard, with inflows/outflows of reserves determining the domestic money supply, which is fixed in a ratio (Hanke suggests 6 to 1, on an $11b reserve base, a lot more than Mexico has right now) to reserves? Reserves are determined by the movements in the capital and current account, just like inflows and outflows of gold, leaving authorities no policy discretion, and forcing an increased external orientation at the same time. Doug -- Doug Henwood [[EMAIL PROTECTED]] Left Business Observer 250 W 85 St New York NY 10024-3217 USA +1-212-874-4020 voice +1-212-874-3137 fax
