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A Common Currency for Belarus and Russia?

Author

Listed:
  • Mr. Vassili Prokopenko
  • Mr. Etibar Jafarov
  • Ms. Anne Marie Gulde

Abstract

This paper discusses costs, benefits, and implementation challenges of a possible currency union between Belarus and Russia. It shows that Belarus and Russia are economically closely linked but nevertheless do not fulfill all "optimal currency area" criteria, especially the macroeconomic symmetry condition. Furthermore, we argue that the different speeds of economic liberalization over the past decade have resulted in different economic structures, with Belarus still dependent on monetary financing of budgets and industries. However, a final cost-benefit analysis also needs to consider that currency unification may bring substantial benefits from reduced transaction costs, an improved macroeconomic environment in Belarus, and by acting as a catalyst to advance structural reforms in Belarus.

Suggested Citation

  • Mr. Vassili Prokopenko & Mr. Etibar Jafarov & Ms. Anne Marie Gulde, 2004. "A Common Currency for Belarus and Russia?," IMF Working Papers 2004/228, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2004/228
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    References listed on IDEAS

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    Cited by:

    1. David G. Mayes & Vesa Korhonen, 2006. "The CIS: Does the Regional Hegemony Facilitate Monetary Integration?," Economie Internationale, CEPII research center, issue 107, pages 173-196.
    2. Carsten Hefeker, 2010. "Taxation, corruption and the exchange rate regime," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 338-346, March.
    3. Libman, Alexander, 2008. "Federalism and regionalism in transition countries: A survey," MPRA Paper 29196, University Library of Munich, Germany.
    4. Denis Kan & Bernadette Andreosso-O'Callaghan & Helena Lenihan, 2011. "Assessing the Feasibility of Monetary Integration in the Former Soviet Republics," International Economic Journal, Taylor & Francis Journals, vol. 25(1), pages 63-89.

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