DP500 The Transition to Convertibility in Eastern Europe and the USSR
|Publication Date:||January 1991|
|Keyword(s):||Convertibility, Eastern Europe, Exchange Rates, Sequencing|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=500|
This paper discusses when and how to introduce foreign exchange convertibility in the process of transformation of the socialist centrally-planned economies into market economies based on private property. It elucidates the need for `robust sequencing' in a programme of economic reforms and the importance of establishing the credibility of the programme. It then discusses why convertibility is so important in the sequence, and it goes on to deal with implementation and exchange rate policy. Macroeconomic stabilization is treated as a central issue in the strategy for achieving convertibility. Finally, the paper comments on alternative sequences and the role of external financial support for convertibility.