ABSTRACT
This chapter offers an economic explanation for the demise of Argentina's currency board system that tied the peso to the US dollar at parity, and operated over the period 1991–2002. It also comments on the suggestion that the official dollarization of the Argentine monetary system (i.e., replacing the peso with the US dollar) would have been an appropriate policy in Argentina's economic circumstances (e.g. Hanke and Schuler 1999). On the basis of the findings discussed below, we are reasonably confident that official dollarization sometime in the early 1990s would not have averted the macroeconomic wreckage that piled up under the currency board in the recession beginning in 1998.
