Free Enterprise and Central Banking in Formerly Communist Countries

7 Pages Posted: 3 Nov 2012

See all articles by Robert L. Hetzel

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 1990

Abstract

The economic difficulties manifest in communist countries have encouraged a desire in many of them to move toward a market economy. This paper surveys specific reasons for the breakdown of centrally planned economies and discusses the difficulties of making the transition to a market economy. A general theme is that a market economy requires the limitation of government intervention in the marketplace. This theme is illustrated by a discussion of the central bank. The final part of the paper advances the proposal that formerly communist countries eliminate their central banks by adopting the currency of a large western country with a stable currency. This proposal is discussed in the context of the German monetary union, which will eliminate the East German central bank.

Suggested Citation

Hetzel, Robert L., Free Enterprise and Central Banking in Formerly Communist Countries (1990). FRB Richmond Economic Review, vol. 76, no. 3, May/June 1990, pp. 13-19, Available at SSRN: https://ssrn.com/abstract=2122667

Robert L. Hetzel (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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