The disintegration of the ruble zone: Driving forces and proposals for policy change
This paper examines the irreversible process of the ruble zone disintegration. Theoretical fundamentals of a common currency area, with modifications incorporating a mechanism of transition from central planning, are discussed. The key reason for the ruble zone break-up is the discontinuation of indirect transfers that were provided mainly by Russia via underpricing energy exports to other republics. Being cut-off from such transfers and unable to finance rising trade deficits with Russia, the independent stales wish to disconnect their economies from the ruble /.one. Among other economic arguments for leaving the ruble zone presented by the former Soviet republics are: a desire to insulate their economies from the ruble zone inflation, and a willingness to collect seigniorage revenues from printing their own currencies. The paper critically evaluates these and several other arguments. The abrupt break-up of the ruble zone causes interruptions in supplies of essential materials and consumer goods, and an income downfall among the republics. The foundation for a new inter-state payments mechanism is proposed in order to cushion these negative effects. A system of independently traded currencies with flexible exchange rates is viewed as a reasonable, yet distant solution.
Year of publication: |
1993
|
---|---|
Authors: | Orlowski, Lucjan T. |
Publisher: |
Kiel : Kiel Institute of World Economics (IfW) |
Saved in:
freely available
Series: | Kiel Working Paper ; 585 |
---|---|
Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | hdl:10419/46995 [Handle] RePEc:zbw:ifwkwp:585 [RePEc] |
Source: |
Persistent link: https://www.econbiz.de/10010275393
Saved in favorites
Similar items by person
-
Orłowski, Lucjan T., (1994)
-
The path of exchange rates in the Polish economic transformation
Orlowski, Lucjan T., (1996)
-
Transition and growth in post-communist countries : the ten-year experience
Orłowski, Lucjan T., (2001)
- More ...