Currency Convertibility and Transition Towards Market Economy: The Rouble Case

Currency inconvertibility has been a systemic feature of the former Centrally Planned Economies (CPEs). The purpose of the paper is to show how major theoretical proposals have dealt with rouble convertibility and, accordingly, to specify the role of convertibility in the transition towards market economy. Considered at first as consistent with the CPE, convertibility was then seen as a target and finally as a powerful means of the transition. As such it has been integrated in a set of reform measures whose enforcement strategy-sequencing or shock therapy- turned, owing to the political and economic turmoil, in favor of the latter. Nonetheless, the lack of restrictive budgetary and monetary policies have impeded convertibility to secure the restructuration process. There is no substitute, not even a nominal anchor, to macroeconomic stability for sustaining the rouble convertibility to enhance the transition.