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A proposal on how to introduce a currency board based monetary system in the republic of Latvia

Rostowski, J. (1992) A proposal on how to introduce a currency board based monetary system in the republic of Latvia. CEPDP, 83. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: 83

Abstract

Latvia is considering adopting a convertible currency which would be highly backed and which would be administered by a currency board. The problem is that with a tiny proportion of national income generated by trade with convertible currency countries this would require a huge initial undervaluation of the new domestic currency (the Lat), which would be highly stagflationary. The introduction of a bi-paper standard, with the Lat as a fully backed second currency circulating in parallel with the rapidly inflating Latvian ruble, avoids these costs. The advantages of such a system for revolutionary banking sector reform are also described.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 1992 J.Rostowski
Subjects: H Social Sciences > HG Finance
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 20 Aug 2008 16:21
Last Modified: 01 Mar 2013 09:32
URI: http://eprints.lse.ac.uk/id/eprint/21046

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