Russian Currency and Finance presents a radical alternative for curing Russia's soaring inflation and unstable currency. The authors argue that stabilization in Russia is unlikely to occur as long as its currency remains under the control of the Central Bank of Russia. They propose that Russia adopt a currency board system such as exists in Hong Kong today. Under this system, the ruble would be linked to a foreign currency at a fixed exchange rate, providing a stable, fully convertible domestic currency for Russia. The currency board system has been well-tested and has been used successfully before in Russia. The book explains in detail how the Russian government could establish and operate a currency board.
Author(s): Steve H. Hanke, Lars Jonung, Kurt Schuler
Edition: 1
Publisher: Routledge
Year: 1994
Language: English
Pages: 230
BOOK COVER......Page 1
HALF-TITLE......Page 2
TITLE......Page 3
COPYRIGHT......Page 4
CONTENTS......Page 5
ABOUT THE AUTHORS......Page 9
FIGURES......Page 10
TABLES......Page 11
PREFACE......Page 12
EXTREME INFLATION AND MONETARY REFORM......Page 14
CURRENCY BOARD VERSUS CENTRAL BANK......Page 17
A CURRENCY BOARD AS THE KEY TO ECONOMIC REFORM IN RUSSIA......Page 24
OUTLINE OF THE REMAINDER OF THIS BOOK......Page 31
THE FUNCTIONS OF MONEY, AND HOW WELL THE ROUBLE PERFORMS THEM......Page 33
STABILITY AND CREDIBILITY......Page 35
CREDIBILITY AND EXCHANGE RATES......Page 37
CONVERTIBILITY AND FOREIGN-EXCHANGE CONTROLS......Page 42
CENTRAL BANKING AND DEFICIT FINANCE......Page 46
POLITICAL INDEPENDENCE: AN UNATTAINABLE GOAL......Page 47
FLEXIBILITY: A PROBLEM EVEN IN THEORY......Page 48
THE EXPERIENCE OF YUGOSLAVIA......Page 51
THE HISTORY OF CENTRAL BANKING IN RUSSIA......Page 53
THE GOVERNMENT BUDGET AND EXTREME INFLATION......Page 56
ENTERPRISE ARREARS......Page 58
COMMERCIAL BANKING......Page 62
THE PAYMENTS SYSTEM......Page 65
INTERREPUBLICAN EXCHANGE......Page 67
FOREIGN EXCHANGE; FOREIGN DEBT......Page 69
RUSSIA AND THE IMF......Page 70
THE MONEY SUPPLY PROCESS IN A CURRENCY BOARD SYSTEM......Page 73
THE MONEY SUPPLY PROCESS IN A CENTRAL BANKING SYSTEM......Page 78
Argentina and Estonia......Page 81
Other Cases......Page 86
A BRIEF HISTORY AND ASSESSMENT OF CURRENCY BOARDS......Page 89
HOW TO CONVERT THE CENTRAL BANK OF RUSSIA INTO A CURRENCY BOARD......Page 92
THE ALTERNATIVE: A PARALLEL CURRENCY APPROACH......Page 95
HOW TO ESTABLISH THE CURRENCY BOARD AS THE ISSUER OF A PARALLEL CURRENCY......Page 98
HOW TO CALCULATE THE INITIAL FOREIGN RESERVES FOR THE CURRENCY BOARD......Page 101
HOW TO OBTAIN THE INITIAL FOREIGN RESERVES FOR THE CURRENCY BOARD......Page 104
HOW TO CHOOSE A RESERVE CURRENCY FOR THE CURRENCY BOARD......Page 106
Exchange policy......Page 109
Commission fees......Page 110
Management......Page 111
Composition of reserves......Page 112
Maturity of reserves......Page 113
Seigniorage......Page 114
HOW TO PROTECT THE CURRENCY BOARD......Page 115
HOW TO CHANGE THE RESERVE CURRENCY, IF NECESSARY......Page 118
7 THE CURRENCY BOARD AND REFORM OF THE RUSSIAN MONETARY SYSTEM......Page 120
THE GOVERNMENT BUDGET......Page 121
ENTERPRISE ARREARS AND ENTERPRISE RESTRUCTURING......Page 123
COMPETITION AND REGULATION IN COMMERCIAL BANKING......Page 124
RESTRUCTURING OF BANKRUPT COMMERCIAL BANKS......Page 127
INTEREST RATES......Page 128
THE PAYMENTS SYSTEM......Page 129
INTERREPUBLICAN EXCHANGE; FOREIGN EXCHANGE......Page 131
WAGES AND PRICES......Page 132
A STABILIZATION CRISIS?......Page 134
INDEXATION......Page 135
8 OBJECTIONS TO A CURRENCY BOARD IN RUSSIA......Page 136
NO LENDER OF LAST RESORT......Page 137
IS RUSSIA TOO LARGE FOR A CURRENCY BOARD?......Page 138
FIXED VERSUS FLOATING EXCHANGE RATES......Page 139
DEFLATION......Page 141
THE INFLATION TAX......Page 142
THE COST OF RESERVES......Page 143
COLONIALISM......Page 144
MISCELLANEOUS QUESTIONS......Page 145
OTHER ALTERNATIVES TO CENTRAL BANKING......Page 146
THE NORTH RUSSIAN CURRENCY BOARD, 1918–20......Page 150
THE CHERVONETS, 1922–6......Page 154
A COMPARISON OF THE REFORMS......Page 157
10 CONCLUSION......Page 159
SUMMARY OF PROPOSALS......Page 160
CONSTITUTION OF THE RUSSIAN CURRENCY BOARD......Page 163
APPENDIX B More about the money supply process in a currency board system......Page 166
APPENDIX C A list of currency board episodes......Page 174
NOTES......Page 184
BIBLIOGRAPHY......Page 196
INDEX......Page 215
