Abstract
The paper examines the problems arising from the adoption of national currencies in former Soviet Republics, and advances proposals to avoid excessive trade and output contractions. The move towards national currencies in many republics — though politically unavoidable and economically efficient in the medium term — is seen as having disruptive effects on interrepublican trade in the short term, with heavy losses of incomes and employment, which add to the costs of market transition. Mutual convertibility among the new currencies could allow some of the negative consequences on trade and production to be overcome, while in the event of mutual currently inconvertibility the effects on interrepublic trade could be disastrous and only some form of payments agreement could reduce the magnitude of the contraction. An intermediate currency regime which could sustain the level of income and employment would be based on the use of the Russian rouble as a regional means of payment. Such an event, however, would require as a pre-condition the stabilization of the Russian currency.
Similar content being viewed by others
References
Bahry, D. (1987),Outside Moscow: Power, Politics and Budgetary Policy in the Soviet Republics, New York, Columbia University Press.
Bennett, A.G.G. (1993), ‘The operation of the Estonian Currency Board’,IMF Staff Papers 40 (2), June, 451–470.
Bofinger, P. (1990), ‘A multilateral payments union for Eastern Europe?’BNL Quarterly Review 176; 69–98.
Bofinger, P. (1991), ‘Options for a new monetary framework for the area of the Soviet Union’, London (mimeo).
Bofinger, P., Svindland, E. and Thanner, B. (1993), ‘Prospects of the monetary order in the republics of the FSU’, in CEPR (1993).
Brabant J.M. van (1991), ‘Key problems of creating a Central European Payments Union’,BNL Quarterly Review 177, 119–149.
Center of Economic Policy Research (1993),The Economics of New Currencies, London, CEPR.
Commission of the European Communities (1990), ‘Stabilization, liberalisation and devolution: Assessment of the economic situation and reform process in the Soviet Union’,European Economy 45, December.
Daviddi, R. (1992), ‘From the CMEA to the ‘Europe Agreements’. Trade and aid in the relations between the European Community and Eastern Europe’,Economic Systems 16(2), 269–294.
Daviddi, R. and Espa, E. (1989), ‘The economics of rouble convertibility. New scenarios for the Soviet monetary economy,BNL Quarterly Review 171, 441–467.
Daviddi, R. and Espa, E. (1990), ‘Macroeconomic reform in USSR and rouble convertibility’ in: Cardani, A. and Noera, M. (eds.)Economic Reform in the Soviet Union — Some Guidelines for Business, LIMI — Euromobiliare, Occasional Papers, Milan, 1991, pp. 13–28.
Daviddi, R. and Espa, E. (1992a), ‘Foreign aid and payments agreements in Central and Eastern Europe’,Economic Notes 21(1), 15–38.
Daviddi, R. and Espa, E. (1992b), ‘Trade and currencies in the monetary disintegration of the Soviet Union’, Paper presented to the 2nd Conference of the European Association for Comparative Economic Studies (EACES), Groningen, The Netherlands, 26–28 September (mimeo).
Daviddi, R. and Espa, E. (1993), ‘Regional trade and foreign currency regimes among the former Soviet Republics’, European University Institute — European Policy Unit,Working Paper, No. 93/4, June.
Daviddi, R., Espa, E. and Uvalic, M. (1992), Currencies in transition. The road towards convertibility in Poland, Russia and Yugoslavia’Rassegna Lavori ISCO, n. 18.
Dornbusch, R. (1991), ‘A payments mechanism for the Soviet Union and Eastern Europe’, in: Gros, D., Pisani-Ferry, J. and Sapir A. (eds.) (1992), ‘Inter-state economic relations in the former Soviet Union’, Brussels, CEPSWorking Document 63, 31–40.
EBRD (1993),Annual Economic Review 1992, London, EBRD.
The Economist (1992), ‘The rouble zone. Behind the facade’,Economist, 19 September, p. 92.
Eichengreen, B. (1993), ‘European Payments Union’,Economic Policy 15, 309–346.
Fischer, S. (1992), ‘Stabilization and economic reform in Russia’,Brokings Papers on Economic Activity 1, 77–111.
Goldberg, L.S., Ickes, B.W. and Ryterman, R. (1993), ‘Departures from the rouble zone: the Implications of adopting independent currencies’, New York University, C.V. Starr Center for Applied Economics,Research Report, No. 93-17, April.
Gros, D. (1991a), ‘A Soviet Payments Union?’, Brussels, CEPSWorking Document, 58, November.
Gros, D. (1991b), ‘Regional disintegration in the Soviet Union: economic costs and benefits’,Intereconomics, 26(5): 207–213.
Gros, D., Pisani-Ferry, J. and Sapir, A. (eds.) (1992), ‘Inter-state economic relations in the former Soviet Union’, Brussels, CEPSWorking Document 63, 63–71.
Hanson, P. (1992), ‘The end of the ruble zone?’,RFE/RL Research Report 1(30), 46–48.
Hansson, A. and Sachs, J. (1992), ‘Crowning the Estonian kroon’,Transition 3(9), 1–3.
Hansson, A.H. (1993), ‘The Estonian kroon: experiences of the first year’, in CEPR (1993).
Havrylyshyn, O. (1992), ‘Why and when new currencies?’, in: Gros, D., Pisani-Ferry, J. and Sapir, A. (eds.) (1992), ‘Inter-state economic relations in the former Soviet Union’, Brussels, CEPSWorking document 63, 72–77.
Havrylyshyn, O. and Williamson, J. (1991),From Soviet disUnion to Eastern Economic Community?, Washington, Institute for International Economics.
Hernandez-Cata, E. (1992), ‘Note on the introduction of a national currency’, in: Gros, D., Pisani-Ferry, J. and Sapir, A. (eds.) (1992). ‘Inter-state economic relations in the former Soviet Union’, Brussels, CEPSWorking document, 63, 63–71.
Hernandez-Cata, E. (1993), ‘The Introduction of national currencies in the former Soviet Union: options, policy requirements and early experience’, in CEPR (1993).
IMF (1992),Common Issues and Interrepublic Relations in the Former USSR, Washington, IMF.
Kenen, P. (1990), ‘Transitional arrangements for trade and payments among the CMEA countries’,IMF Staff Papers 38(2), 235–267.
Lupinovich, E. and Malinka, V. (1992), ‘Economic relations of Russia and the former USSR republics’, paper presented at the 2nd Conference of the European Association for Comparative Economic Studies (EACES), Groningen, The Netherlands, 26–28 September (mimeo).
Michalopoulos, C. and Tarr, D. (1992), ‘Transitional trade and payments arrangements for states of the former USSR’, Washington, World Bank (mimeo).
McKinnon, R. (1992), ‘Taxation, money and credit in a liberalizing socialist economy, in: Clague, C. and Rausser, G.C., (eds.)The Emergence of Market Economies in Eastern Europe, Oxford, Blackwell.
Nordhaus, W.D. (1992), ‘Comments and discussion’,Brooking Papers on Economic Activity 1, 116–123.
Nuti, D.M. (1991), ‘How quickly should convertibility be introduced? A comment on Friedrich Levcik and Jacques J. Polak’, in: Williamson J. (ed.)Currency Convertibility in Eastern Europe, Washington, Institute for International Economics, pp. 48–55.
Nuti, D.M. (1992). ‘Multilateral payment mechanisms for the former Soviet Union. A comment’, Brussels (mimeo).
Nuti, D.M. and Pisani-Ferry, J. (1992), ‘Post-Soviet issues: stabilization, trade and money’, in: Dornbusch, R. and Bofinger, P. (eds.)The Economic Consequences of the East, London, CEPR.
PlanEcon (1992), ‘What do the Former Soviet republics export and import: initial review of commodity composition of trade’,PlanEcon, Report VIII(26), June.
PlanEcon, Report (1993),Russian Economic Monitor, Nos. 44–45, December.
Schiffer, J.R. (1989),Soviet Regional Economic Policy, London, Macmillan.
Senik-Leygonie, C. and Hughes, G. (1992). ‘Industrial profitability and trade among the former Soviet republics’,Economic Policy 15, 353–386.
Slay, B. (1992), ‘Introducing national currencies: Causes and consequences’,RFE/RL Research Report 1(30), 49–52.
United Nations — Economic Commission for Europe (1991).Economic Bulletin for Europe, n. 43, Geneva, United Nations.
United Nations — Economic Commission for Europe (1992).Economic Survey of Europe in 1991–92, Geneva, United Nations.
United Nations — Economic Commission for Europe (1993).Economic Survey of Europe in 1992–1993, Geneva, United Nations.
Williamson, J. (1992),Trade and Payments after Soviet Disintegration, Washington, Institute for International Economics.
Zaleski, E. (1992), ‘Le rouble en période de transition vers le marché’,Chroniques de la S.E.D.E.I.S. 11, 437–448.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Daviddi, R., Espa, E. Regional trade and foreign currency regimes among the former Soviet Republics. Econ Plann 28, 29–57 (1995). https://doi.org/10.1007/BF01267748
Issue Date:
DOI: https://doi.org/10.1007/BF01267748