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Costs and Benefits of Monetary Disintegration:The Czech-Slovak Case

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  • Katerina Smidkova

    (Czech National Bank)

Abstract

In 1992, the political dissolution of Czechoslovakia highlighted the problem of designing monetary disintegration for two interdependent republics. This paper weighs costs and benefits of the gradual approach to monetary disintegration that was applied in the Czech-Slovak case. The analysis suggests that the careful design with two intermediate stages was superior to a longer maintaining of a common currency or a sudden monetary disintegration. The newly established currencies inherited credibility of the Czechoslovak crown although their external characteristics differed in the first two years of their existence. Moreover, the economic disintegration was not induced and the newly gained independence in monetary and exchange-rate policies was realized to respond to asymmetric economic problems.

Suggested Citation

  • Katerina Smidkova, 2004. "Costs and Benefits of Monetary Disintegration:The Czech-Slovak Case," Macroeconomics 0403002, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0403002
    Note: Type of Document - ; pages: 23. The paper was published in Introduction of New Currencies and National Monetary Sovereignty, Development and International Cooperation (1995) Ljubljana, Vo. XI, No.20-21.
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    Keywords

    Monetary union Separation of Currencies Czechoslovakia;

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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