Abstract

Convertibility of East Bloc Currencies as a Complex Decision Problem of Economic Policy

The article deals with the laws and interferences of convertibility policies in COMECON countries, especially with ihe system immanent interferences which have received little attention till now. First, the author explains why not even a multilateral clearing system among central banks has been realized. COMECON countries exchange on the basis of world market prices; they do not allow deficits or surpluses in their overall or special balances of different groups of merchandise. So there is no substantial need for clearing operations. Then, the author shows why the existing restrictions on international trade and international payments could only be abolished by cooperative action. But the advantages would be mainly on the side of firms and citizens interested in international exchange of goods and services, disadvantages (restrictions of decision power) on the side of governments. This makes governments unwilling to render this service to their citizens, and under a monopolistic decision making system they may well continue to avoid any measures which would improve international competitiveness of firms and consequently the convertibility of currencies. Other (system independent) factors of interference with political decision making are the different stages of development of the COMECON countries (which make some countries aim for a price basis independent from world market levels, similiar to the Soviet Union), the unequal distribution of important resources among different member countries and the political motivation of the Soviet Union, which results in a general uninterestedness in the convertibility problem. Finally, the author discusses briefly some possibilities to solve this difficult decision problem