布鲁盖尔-Collapse-of-the-Ruble-zone-and-its-lessons_9页_462kb

Summary of the Collapse of the Rouble Zone and Its Lessons

Core Content

The document analyses the collapse of the CMEA (Council for Mutual Economic Assistance) and the Soviet ruble area in the post-communist transition period, focusing on the political and economic implications of monetary disintegration in Central and Eastern Europe (CEE) and the former Soviet Union (FSU). It highlights the transition from centrally planned economies to market-based systems, the role of the transferable ruble (TR) as an accounting unit, and the subsequent emergence of national currencies in the FSU.

Main Points

1. The CMEA and the Transferable Rouble

• CMEA Overview: The CMEA existed from 1949 to 1991, comprising the USSR, Bulgaria, Czechoslovakia, Cuba, GDR, Hungary, Mongolia, Poland, Romania, and Vietnam (with Albania having left earlier).
• TR Function: The TR was not a real currency but an accounting unit used for trade settlements within the CMEA. It was not used for non-commercial transactions.
• Termination: The CMEA trade regime ended in 1991 as a result of political and economic changes. Member states replaced TR with convertible currencies and introduced market-based trade decisions.
• Impact: The termination of the CMEA trade regime caused a negative output shock in CEE economies, especially for those with high exposure to CMEA trade. The shock was due to the loss of export markets and deterioration in terms of trade.
• Orderly Transition: Only Czechoslovakia's separation into two currencies was orderly, unlike other cases in the FSU.

2. Collapse of the Soviet Rouble Area

• Economic and Political Preconditions: The Soviet ruble area was created due to political reasons rather than economic rationality. It was vulnerable to asymmetric shocks due to the central planning system and lack of resource mobility.
• First Stage (1990-1991):
  • Sovereignty Declarations: The RF's declaration of sovereignty in 1990 marked the beginning of the Soviet Union's disintegration.
  • Monetary Policy Shift: The CBRF (Central Bank of Russia) began to take control over regional Gosbank branches and introduced autonomous credit emission.
  • Fiscal and Social Competition: The RF started to finance its budget deficit and enterprises independently, leading to fiscal and social tensions.
• Second Stage (1992-1993):
  • Phases of Dissolution: The ruble area dissolved in four phases, with five FSU countries fully exiting in 1992-1993.
  • National Currency Introduction: Estonia, Latvia, Lithuania, Ukraine, and Kyrgyzstan were the first to introduce their own currencies.
  • Final Dissolution: By mid-1993, all remaining FSU countries (except Tajikistan) had introduced their own currencies. The CBRF stopped technical credits and transformed outstanding balances into inter-governmental credits.
• Failed Rebuilding Attempts:
  • Agreements and Treaties: Several attempts were made to maintain the ruble area, including the Agreement on a Uniform Monetary System (1992), the Economic Union Treaty (1993), and the New Style Ruble Area (NSRA) agreement (1993).
  • Reasons for Failure: These agreements were too general, lacked implementation details, and were undermined by sovereignty concerns and economic divergence. Political reluctance to surrender economic autonomy was a major obstacle.

Key Information

• The TR: A quasi-currency used for trade settlements, not for non-commercial transactions.
• Monetary Disintegration: Occurred in two phases: the end of CMEA trade regime in 1991 and the collapse of the Soviet ruble area in 1992-1993.
• Factors Behind Disintegration:
  • Political sovereignty movements.
  • Economic inefficiencies and lack of convertibility.
  • Asymmetric shocks and inability to adjust via flexible exchange rates.
• Consequences:
  • Trade disruption and output losses in countries heavily dependent on intra-Soviet trade.
  • Macroeconomic instability due to uncontrolled monetary expansion and fiscal mismanagement.
• Policy Lessons:
  • Monetary integration is not viable in economies with structural rigidities and lack of market mechanisms.
  • The collapse of the CMEA and the ruble area was a necessary outcome of political and economic transformation.
  • The disintegration process, while disruptive, eventually led to structural reforms, trade reorientation towards the EU, and the emergence of new market economies.

Timeline of Currency Introduction in the FSU

Conclusion

The collapse of the CMEA and the Soviet ruble area was an inevitable consequence of the post-communist transformation. It led to significant economic and political changes, including the emergence of new national currencies and the reorientation of trade towards the EU. The process was marked by both macroeconomic instability and the eventual restructuring of economic systems. The lessons drawn emphasize the incompatibility of centrally planned economies with monetary integration and the importance of political sovereignty in the transition to market economies.