Johns Hopkins University professor Steve Hanke yesterday attempted to breathe life into his plan for the creation of a currency board in Indonesia by proposing the establishment of a parallel currency. Prof Hanke, who will take his altered plan to Jakarta this weekend, said the currency board would be based on a new rupiah, anchored to the US dollar and fully supported by foreign exchange. It would co-exist alongside the old rupiah which was likely, over time, to disappear, he said. The alteration will add to the controversy surrounding Prof Hanke since he accepted President Suharto's offer to advise on measures for coping with the collapse of the rupiah. He came under attack this week from Massachusetts Institute of Technology professor Paul Krugman who accused him of being a 'snake oil salesman' and the 'rupiah's Rasputin'. Prof Hanke has refused to respond while attending the Credit Suisse First Boston Asian Investment Conference this week. The change to his plan has not been discussed with the president who is in the final stages of agreement on an International Monetary Fund-led economic rescue plan which is expected to be announced next week. With the conclusion of the discussions so close, the chances for the adoption of Prof Hanke's revised formula appear slim. They were yesterday seen in Jakarta as a futile effort to get the currency board plan back on track. The restructured plan also comes after several Indonesian Government officials expressed severe reservations about the establishment of any form of currency board and persistent opposition to it from the IMF and Washington. 'Many opponents of currency boards will complain of the complications of two currencies that are legal tender,' the professor said. 'But many of these complaints will come, no doubt, from those who embrace Europe's move to a currency union in which the Europeans are rushing headlong into.' Parallel currencies have been 'common and successful historically' and Prof Hanke noted that the US dollar circulates in quite a number of countries as a de facto second currency, including Indonesia. The creation of a currency board is being discussed in the context of an overall reform of the monetary system but has been pushed to the sidelines by a growing preference for a return to a currency band system. He said the dual-currency plan would resolve the biggest problem facing his scheme. This is that a currency board would have insufficient foreign reserves to cover all the 'old rupiah' in circulation. 'Under this alternative, the existing stock of rupiah would remain on the books of the Bank of Indonesia and in the pockets of Indonesians. But no more old rupiah (OIR) base money would be created by the Bank of Indonesia,' he said. 'The OIR printing presses would literally close down.' Prof Hanke declined to disclose the size of Indonesia's reserves but inferred that 'friendly neighbours' would intervene to bolster the country's foreign reserves if necessary. Singapore Prime Minister Goh Chok Tong has given such a commitment but discussions are continuing on the scope of the assistance. He used the conference to launch another staunch defence of the currency board system, saying they had a history of success in crisis situations and again cited Bulgaria, Estonia and Argentina as recent examples. The IMF, in rejecting his plan, had ignored the achievements of Hong Kong which established a currency board in 1983, Prof Hanke said. The professor said the Hong Kong dollar's relative resilience during the recent regional currency crisis was further proof of the system's merits.