This chapter examines Argentina’s currency board arrangement (CBA) to determine whether its economic crisis in the late 1990s occurred because of or despite the currency board. The chapter is organized as follows. Section 8.2 recounts the background to Argentina’s 1991 readoption of a currency board regime. Section 8.3 reviews performance under the regime: the initial disinflation success in the early 1990s, weathering the “Tequila” shock in 1994–1995, the downturn in the late 1990s, and finally the 2002 crisis. Section 8.4 considers alternative explanations for the collapse, focusing on the role of the currency board, in particular whether the regime resulted in an overvaluation of the real exchange rate that led to sluggish export and output growth or whether the strictures of the CBA on monetary policy are to blame, and Section 8.5 concludes.
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