Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46995 
Year of Publication: 
1993
Citation: 
[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1993
Series/Report no.: 
Kiel Working Paper No. 585
Publisher: 
Kiel Institute of World Economics (IfW), Kiel
Abstract: 
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.
Document Type: 
Working Paper
Document Version: 
Digitized Version

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