In developing countries with immature financial markets, a freely floating exchange rate may not be sensible because a small number of foreign-exchange trades can cause big swings in currencies.
Under a currency board arrangement, the central bank guarantees the redemption of all notes in circulation at a set exchange rate to the dollar or another foreign currency or basket ofcurrencies.
Curiously, at the same time, economic stress can lead to manipulation of foreign-exchange rates, usually to keep local currencies relatively low even as nominal interest rates rise with inflation.
As a consequence, their proposed solutions do not address the underlying instability of the current system of floating paper currencies that bob about on foreignexchange markets whipped this way and that by forces that have little, if any correlation to the so-called underlying fundamentals.