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The Handbook of Political, Social, and Economic Transformation$
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Wolfgang Merkel, Raj Kollmorgen, and Hans-Jürgen Wagener

Print publication date: 2019

Print ISBN-13: 9780198829911

Published to Oxford Scholarship Online: March 2019

DOI: 10.1093/oso/9780198829911.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 08 April 2020

Monetary Transformation

Monetary Transformation

Chapter:
(p.573) Chapter 62 Monetary Transformation
Source:
The Handbook of Political, Social, and Economic Transformation
Author(s):

Hubert Gabrisch

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198829911.003.0062

Monetary transformation means the conceptual restoration of the functions of money in a former quasi-barter economy, in which the use of legal money and foreign currency was limited and financial markets were widely non-existent. Therefore, the chapter throws special light on the development of a market-based credit system, consisting of commercial banks, a central bank, and other financial institutions. As with any other range of the transformation process, monetary transformation is not free of frictions, crises, and challenges. The chapter discusses the typical challenges at the start of the transformation, such as the problem of non-performing loans, and the frequent banking and currency crises. The new central banks face specific challenges in the stabilization of the domestic and external value of their currencies, and in supervising and guiding monetary/financial intermediation in the transition period.

Keywords:   barter, money, credit, money multiplier, financial system structure, banking sector, non-performing loans, central bank, banking crises

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