Currency Boards for Eastern Europe

The Heritage Lectures No. 355. Washington, D. C.: The Heritage Foundation, 1991

42 Pages Posted: 30 Apr 2013

See all articles by Steve H. Hanke

Steve H. Hanke

Johns Hopkins University - Department of Economics

Kurt Schuler

Center for Financial Stability

Abstract

As long as Eastern Europe and the USSR have unsound currencies, they will be unable to transform themselves into market economies. A sound, convertible currency allows people to carry out decentralized planning, which is more efficient than central planning. In nations with so-called internally convertible currencies, all that is usually required to buy goods domestically is to have currency to pay a domestic seller. Internal convertibility implies that it is not necessary to obtain authorization from any central planner to buy or sell goods that are available inside the country. The exchange of goods is much more extensive, rapid, and efficient where internal convertibility exists, as in the United States, Germany, and Poland, than where it does not, as in Albania and the USSR.

Keywords: Steve, Hanke, Kurt, Schuler, Currency, Boards, For, Eastern, Europe, Heritage, Foundation

Suggested Citation

Hanke, Steve H. and Schuler, Kurt, Currency Boards for Eastern Europe. The Heritage Lectures No. 355. Washington, D. C.: The Heritage Foundation, 1991 . Available at SSRN: https://ssrn.com/abstract=2258010

Steve H. Hanke (Contact Author)

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States
410-516-7183 (Phone)
410-516-8996 (Fax)

Kurt Schuler

Center for Financial Stability ( email )

New York, NY
United States

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