Currency boards and the "tequila crisis"

Just started reading a new book by Krugman about the financial crisis of 2008. Anyway, he talks about the "tequila crisis" in Latin America and mentions a rather interesting situation called a currency board. Basically it is a situation where the currency of one country is pegged to another currency at a fixed exchange rate. In Argentina's case, the peso was pegged to the US Dollar at a one to one ratio which helped to curb the soaring inflation as the number of pesos in circulation equal the reserves of dollars the central bank in argentina have. This is so that every peso is covered for if they are wanted to be exchanged for dollars. As the story continues this leads to the peso being overvalued which leads them to depreciate it (hoping for export led growth and renewed foreign investment). What i found interesting in the story was this devaluation led to a financial collapse as foreign investors anticipated a further fall and signaled that the economy was in trouble. The idea of a currency board therefore doesnt seem like a good idea in the case for Argnetina but it is an effective way of slowing down rises in the money supply as new notes can only be printed in exchange for currency against which the domestic currency is pegged. Learn something new everyday.