Financial Reform in the Former U.S.S.R.
Nicholas N. Kozlov
Since August 1991, the pace of change in the Soviet-Russian financial system has matched the flow of political developments, particularly in the wake of the very fluid situation induced by the collapse of central authority. During the week ( December 1, 1991) that this chapter was written, the assets of Gosbank S.S.S.R. and Vneshekonombank S.S.S.R. were sequestered by the Central Bank of Russia, 1 the Russian republican government took upon itself the funding of the Union government budget, and the overwhelming passage of the Ukrainian independence referendum was accompanied by strong indications that several republics (states), including Russia, would begin issuing their own currencies. 2 The December 8 declaration of the formation of a Commonwealth of Independent States envisioned that a single currency unit would be maintained, but this is increasingly unlikely, given the intentions expressed by Ukraine and Moldavia.
The current predilection for the "microfoundations of macro" within the economics profession has led most Western observers of perestroika to focus primarily on decentralization and price liberalization, with very little thought given to the establishment of macroinstitutions necessary to support decentralized economic activity or to the appropriate sequencing of reforms in the transition from an administered economy to a market economy. 3 Macro "policy" suggestions from most Western advisers are limited to sermons on the imperative of fiscal and monetary austerity. Unfortunately, Soviet policymakers have followed this lead, and reforms such as the devolution of decision-making authority to the enterprise level (the July 1987 Law on State Enterprise [Association]), introduction of novel property relations (the 1988 Law on Cooperatives), and decentralization of foreign trade (beginning January 1987) all preceded the implementation of comprehensive measures to establish