GODFATHERS OF EASY MONEY

In their struggle to preserve the value of their nations' currencies, finance ministers in Russia and several Asian countries are doing something that would never have occurred to them a decade ago. They are thinking of replacing central banks with currency boards. These are institutions without discretionary control over money, whose currency issues must be fully backed by foreign currency reserves. Central banks, it seems, are in danger of losing their status as symbols of monetary sophistication. It is about time. Central banks have long enjoyed a reputation they do not deserve. Like mafia godfathers, they command respect mainly because of the damage they are capable of inflicting, and are praised for "protecting" the clients they themselves threaten (albeit not always deliberately). Thus central bankers enjoy the status of "inflation fighters", as if there were such a'thing as a serious bout of inflation not driven by central-bank expansion.