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 ?
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.
3) The Currency Reserves Act of 1987 further required 100 percent backing in foreign exchange reserves for the new Cook Islands dollar (Cook Islands Government 1987b).
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.
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.
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 .
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.
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.
Islands Business (1995) "The Trouble with the Cook Islands Dollar.