Systemic Requirements for Monetary Stability in Eastern Europe and the Former Soviet Union

Jacek Rostowski

No 1994/024, IMF Working Papers from International Monetary Fund

Abstract: The primary function of banks during economic transformation is seen to be provision of an efficient payments mechanism. The lack of banking skills, particularly in credit allocation, is seen as the major problem in stable monetary systems. This is a problem which can be expected to last many years. The solution is to limit banks to very safe assets (initially central bank liabilities). Combining such safe banks with a monetary rule would provide stable monetary systems during transition.

Keywords: WP; government; bank; banking system; central bank; rule; commercial bank; post-communist government; money multiplier; state bank; debt forgiveness; bank assets; savings bank; PCE banking system; monetary rule; targeted money aggregate; bank management; successive bank recapitalization; Commercial banks; Monetary base; Currencies; International reserves; Monetary systems; Eastern Europe (search for similar items in EconPapers)
Pages: 24
Date: 1994-02-01
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