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Development in 1990-1992.



HISTORY OF CZECHOSLOVAK CURRENCY.

The economic and monetary development of the Czech and Slovak Federal Republic in these years was relatively favorable. Especially in the challenging environment of the first steps of economic transformation, especially the radical entry into far-reaching privatization, price liberalization, the introduction of the internal convertibility of the koruna, the promotion of market principles, etc. At the same time, there were drastic changes in the structure of foreign trade relations, when after the collapse of the socialistly constructed Council of Mutual Economic Assistance in Moscow, they focused on developed Western European countries. The decline in economic performance measured by the year-on-year change in real gross domestic product was relatively small and lasted for a short time. The favorable development of inflation was to some extent foreshadowed by favorable starting conditions. Even in 1989, the Czechoslovak economy maintained a relatively balanced monetary development in the central management system even before 1989. An important role in stabilizing price developments was played by a restrictive - rather neutral since 1992 - monetary policy and, within it, a fixed exchange rate of the koruna as a "nominal anchor", i.e. as a stabilizer of tradable goods prices. The favorable development of the balance of payments account and the first signals of increased foreign capital inflows in the form of direct investment and the strengthening of foreign exchange reserves by drawing funds from supranational institutions, especially the International Monetary Fund, made it possible to gradually ease or even abolish some foreign exchange management instruments.
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