This endeavor required to significantly narrow the goals of their central banks and to grant them independence from partisan politics. It also required some other very important things, such as disciplining commercial banking , r estraining public sector budget-deficits and restoring a measure of flexibility in the wage and labor markets. Only under such stringent conditions it is possible for a region or for an economy to exert a limited amount of monetary independence. And let me highlight the term limited because I'll revisit it below. More often than, not widely accepted foreign currencies play the role that gold and silver used to play in the past as the true standard of value wherever weak currencies prevailed.
Worldwide experience suggests that such pretension is unrealistic .
It seems, thus, that developing countries committed to sound resource allocation face two alternatives. The point is easily illustrated by recalling that when the current Deutsche mark was born back in 1948, it was traded 1 to 1 with the Argentine currency of the time, and that both currencies were traded vs. the U.S. dollar at the rate of 4 to 1. So, the role of the U.S. dollar as the standard of value was widespread in Argentina well before the introduction of the CBA in 1991. It can thus be said that the CBA was introduced in Argentina to mend mistakes made in the past, as well as to save the national currency from vanishing altogether. Turning back to Argentina, it is very important to note that the 1991 Act not only introduced a new peso with full dollar backing and convertibility at a fixed rate, but that the same Act gave all dollar transactions full legal backing, as well, making dollar denominated obligations legally payable in dollars .