A Common Currency for Belarus and Russia?
IMF Working Papers, December 1, 2004
Source details
- Canonical URL
- A Common Currency for Belarus and Russia?
Other formats
Bibliographic details
- Authors: Vassili Prokopenko, Etibar Jafarov, Anne Marie Gulde
- Published: December 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451875478.001
Summary and central conclusion
- Paper discusses costs, benefits, and implementation challenges of a possible currency union between Belarus and Russia.
- Belarus and Russia are economically closely linked but do not fulfill all "optimal currency area" criteria, especially the macroeconomic symmetry condition.
- Different speeds of economic liberalization over the past decade have produced different economic structures; Belarus remains dependent on monetary financing of budgets and industries.
- A final cost-benefit analysis must also consider potential substantial benefits from reduced transaction costs, an improved macroeconomic environment in Belarus, and the possibility that currency unification could act as a catalyst to advance structural reforms in Belarus.
Economic linkages and "optimal currency area" criteria
- Belarus and Russia are described as economically closely linked.
- The pair nevertheless fail to meet all "optimal currency area" criteria; the macroeconomic symmetry condition is highlighted as not fulfilled.
Structural differences and dependence on monetary financing
- Different speeds of economic liberalization over the past decade resulted in different economic structures.
- Belarus is still dependent on monetary financing of budgets and industries.
Potential benefits of currency unification
- Reduced transaction costs.
- Improved macroeconomic environment in Belarus.
- Acting as a catalyst to advance structural reforms in Belarus.
Implementation challenges and considerations
- The paper discusses costs, benefits, and implementation challenges of forming a currency union between Belarus and Russia.
- A complete cost-benefit analysis needs to weigh the asymmetric macroeconomic conditions and structural differences against potential gains listed above.