Central Bank Autonomy, and Inflation and Output Performance in the Baltic States, Russia, and Other Countries of the Former Soviet Union, 1995-1997

Abstract

The Soviet Union dissolved in late 1991. But, for some time thereafter, the ruble remained legal tender in the Baltic states, Russia, and other countries (BRO) of the former Soviet Union. The ruble zone gradually collapsed and the newly independent countries began to take responsibility for their own monetary policy.1 The BRO countries could not, for obvious reasons, rely on a good track record, but had to establish autonomous and accountable central banks in their respective countries, perhaps supplemented with a rule-based monetary policy, to ensure credibility.2 Most of the BRO coun tries, therefore, adopted central bank legislation embracing these prin ciples, but also reflecting local conditions in each country. This helps explain the many variations in central bank legislation among the fifteen BRO countries, in spite of their similar points of departure. The purpose of this paper is to compare the central bank autonomy and accountability of each BRO country, as revealed by its central bank legislation through the