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Source link: http://archive.mises.org/3180/one-country-three-currencies/

One Country, Three Currencies

February 17, 2005 by

The Dollar Gives Way to Euro Cash, says Pravda. “Russian people will probably favor their national currency in two or three years. The default of 1998 still has a big impression on the majority of Russians. A lot of them realize that it is oil, which makes for the strength of the ruble. The popularity of ruble tools, ruble bank deposits, first and foremost, will definitely be growing. The dollar and euro rate will most likely be stabilized, because Europe is not interested in the expensive euro: it decreases the competitive ability of the European economy. Russia will probably become a three-currency space (dollar, euro and ruble), and people will be psychologically oriented at the strongest one of them.”

{ 1 comment }

Harold Crews February 20, 2005 at 9:59 am

So long as there are free floating exchange rates on the multiple circulating currencies, this sounds like a pretty good idea. At least regular people have the opportunity of protecting assets when the central bankers decide to exploit the temporary advantage of being momentarily over-valued against the other currencies. But it is a sorry state when the choice is between the lesser of lies.

But honestly how long can it last. If those interests who hold the reins of power can shift the costs of misallocating assets by choosing the wrong currency can use state power to change exchange rates in their favour. The only real solution is a free market currency backed by precious metal(s).

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