A multilateral payments union for Eastern Europe?

P. BOFINGER

Abstract


This paper attempts to assess the advantages and disadvantages of a payments union for the Eastern European member countries of the former Council for Mutual Economic Assistance (CMEA). The main question is whether CMEA countries should be subject to a ‘shock’ therapy of rapid liberalisation or whether a more gradual approach with restricted convertibility would be advisable. The author analyses the case for multilateralism versus bilateralism and proposes a tentative partial compromise solution.


JEL: P20, F33


Keywords


Shock therapy, liberalisation, gradual approach, Post-soviet transition, Payments union

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Reg. Tribunale di Roma n.377/2009 del 19/11/2009