THE CURRENCY BOARD SYSTEM : THE EXPERIENCES OF SINGAPORE, MALAYSIA AND BRUNEI

Abstract

More and more developing countries are adopting the currency board system in order to maintain the financial stability in their countries. They see the currency board system as an instrument that could help them to solve the problems they face such as the high rate of inflation, huge amount of budget deficits, and low rate of economic growth. Many economists have also provided their evaluation of the currency board system. This thesis will provides an examination of the experiences of Singapore, Malaysia and Brunei with the currency board system. These countries were under the same currency board, the Board of Commissioners of Currency, Malaya and British Borneo, before 1967. The currency board was established by the colonial government. The effects of the currency board system on Singapore, Malaysia and Brunei will also be examined. The currency board system was being replaced in Malaysia by the central banking system. Singapore and Brunei on the other hand, have implemented some modifications to the currency board system. They were able to ensure the financial stability in their countries after these changes had been made. The experiences of Singapore, Malaysia and Brunei could be a guide to developing countries who wish to maintain financial stability in their countries.