Cook Islands Dollar


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Cook Islands Dollar

The currency of the Cook Islands. It was introduced in 1972, replacing the New Zealand dollar, to which it is still pegged at a one-to-one ratio.
References in periodicals archive ?
Islands Business (1995) "The Trouble with the Cook Islands Dollar.
TABLE 4 QUARTERLY MONETARY DATA AFTER THE ELIMINATION OF THE COOK ISLANDS DOLLAR, 1995-97 Notes and Coins Demand M1 Term/Saving M3 in Circulation Deposits Total Deposits Total 1995:1 4,571 9,746 14,317 36,578 50,895 1995:2 1,343 8,487 9,830 38,798 48,628 1995:3 1,206 9,859 11,065 38,136 49,201 1995:4 1,036 10,702 11,738 38,029 49,767 1996:1 374 9,103 9,477 37,071 46,548 1996:2 182 9,339 9,521 37,547 47,068 1996:3 151 11,586 11,737 40,867 52,604 1996:4 138 12,648 12,786 42,428 55,214 1997:1 137 10,944 11,081 44,275 55,356 1997:2 137 20,834 20,971 40,767 61,738 1997:3 137 16,443 16,580 44,220 60,800 1997:4 137 18,744 18,881 44,989 63,870 NOTE: Data are expressed in thousands of New Zealand dollars.
Although the breakdown of the Cook Islands dollar occurred only after the government had reined in the original 100 percent reserve backing for the currency board, the key issue is whether a way earl be found to definitively guard against this kind of slippage when pressures for faster rates of monetary expansion emerge in the economy.
The effective rejection of the Cook Islands dollar by the two major commercial banks coupled with tight credit and capital flight had severe effects on the economy.
This left the local authorities vulnerable to a run on the Cook Islands dollar (CI$) that erupted in 1994-95 in the face of "persistent rumors of a devaluation .
6) Based on Figure 1, it also appears that the respective CPIs continued to diverge even after the abandonment of the Cook Islands dollar in the mid-1990s--albeit with more similar trends emerging after 2000.
Accelerating rates of currency issuance in the early 1990s, combined with rising government budget deficits, eventually led to a critical loss of confidence in the Cook Islands dollar in 1994, which was followed by the withdrawal of the local currency from circulation in 1995.
Prior to the issuance of the Cook Islands dollar in 1987, the common currency shared by the Cook Islands and New Zealand was accompanied by almost identical price movements in the two economies.
In the Cook Islands case, money finance of the government's budget deficits, aided by reduced reserve backing for the Cook Islands dollar, allowed fiscal retrenchment to be delayed in the early 1990s.