ABSTRACT
This chapter discusses some light on traditional exchange rate policies of Council for Mutual Economic Assistance (CMEA) countries and, further, to evaluate the various steps taken by these countries on the way to achieving convertibility of their national currencies. Most CMEA countries are attempting to reform their economic systems and to introduce at least some elements of the market into their traditional administrative practices of economic management. The traditional exchange rate policies of CMEA countries were closely related to the state monopoly on foreign trade and all foreign exchange operations. Foreign trade transactions are conducted in convertible currencies, in clearing currencies, and in transferable rubles. Commercial exchange rates have usually been derived either directly from average internal exchange rates or from average internal rates with a certain premium for export stimulation. Artificially fixed exchange rates deprive both planners and enterprises of the necessary information regarding comparative domestic costs.
