> It is not clear to me that a currency board inevitably involves fixed
> exchange rates which cannot be devalued.
By definition, it does. You peg your currency to a stronger one,
abandon any exchange controls, and adopt the rule that your monetary
base will never exceed your central bank's foreign reserves, valued at
the fixed exchange rate. If you have some other monetary arrangement in
mind you should specify it, and probably call it something different.
I don't know what Lenin had in mind -- these were typically colonial
institutions, but might be a quick expedient before something else could
be set up. Curiously, J.M. Keynes wrote a memo in 1918, while he was at
the British Treasury, proposing a currency board for the region then
controlled by the White Russians.
To pick up two other points real quickly: (a) Hong Kong has never been
an independent country, so it's of limited applicability to
understanding the operation of currency boards outside colonies (b)
Argentina is not part of a U.S. "free trade area." The key is simply
that Argentina is a major debtor and the IMF supports creditors.
Best, Colin
