Subject category:
Economics, Politics and Business Environment
Published by:
IBS Case Development Center
Length: 8 pages
Data source: Published sources
Topics:
Russian financial, economic crisis; Perestroika restructuring programme; Five-year plans; Privatisation; The Russian trading system; Devaluation of the rouble; Exchange rate float; Russian economy; Boris Yeltsin; Russian dollar peg; Market oriented economy; Balance of payments; The Russian rouble, ruble; Russian Central Bank; Union of Soviet Socialist Republics
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Abstract
Russia was the largest state of the USSR. Under the Presidency of Gorbachev in 1990-1991, the soviet government introduced privatisation reforms. Following the reforms, the retail prices in the USSR increased and the real gross domestic product reduced. After breaking away from the USSR in 1991, Russia started transferring into a market-oriented economy. In order to stabilise its economy, the Russian Central Bank increased the interest rates and issued government bonds called GKOs. By 1997, inflation had been brought down and the rouble, the Russian currency, had stabilised. But following the Asian crisis, the foreign investors in Russia lost their confidence in both the currency and bond markets. Forced by the mounting pressure, the Russian government allowed the rouble to float and stopped the payment on GKOs to the value of $40 billion. This case helps to discuss the reasons that led to the Russian financial crisis and how the foreign trade of Russia has helped to bring back economic stability in the country.
Location:
Other setting(s):
1998
About
Abstract
Russia was the largest state of the USSR. Under the Presidency of Gorbachev in 1990-1991, the soviet government introduced privatisation reforms. Following the reforms, the retail prices in the USSR increased and the real gross domestic product reduced. After breaking away from the USSR in 1991, Russia started transferring into a market-oriented economy. In order to stabilise its economy, the Russian Central Bank increased the interest rates and issued government bonds called GKOs. By 1997, inflation had been brought down and the rouble, the Russian currency, had stabilised. But following the Asian crisis, the foreign investors in Russia lost their confidence in both the currency and bond markets. Forced by the mounting pressure, the Russian government allowed the rouble to float and stopped the payment on GKOs to the value of $40 billion. This case helps to discuss the reasons that led to the Russian financial crisis and how the foreign trade of Russia has helped to bring back economic stability in the country.
Settings
Location:
Other setting(s):
1998