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  • Essay / Belarus should abolish restrictions on currency trading

    Gold, silver and bronze coins were traded during the Roman Empire and the shortage of coins created a barrier to monetary circulation. However, with the creation of paper money, a sophisticated banking system, a global clearing system, and electronic money, the global financial system evolved with a global framework of legal agreements. In the global financial market, foreign currencies issued by the world and countries are traded by buyers and sellers using exchange rates. Today, it is very common for companies in one country to raise capital in a foreign country by listing their shares on major foreign stock exchanges, given the growth of stock markets which are becoming increasingly global (SNHU, 2015). Belarus decides to abolish the currency trade restriction The net value of goods and services imported by Belarus from other countries has exceeded its exports of goods and services to other countries, creating a large current account deficit . The reason Belarus, a former Soviet republic, lifted restrictions on currency trading is because its political leaders allowed the Belarusian national currency to depreciate as part of a strategy to reduce the current account deficit. The unification of exchange rates will allow the foreign exchange market to function as before. Overheating of the economy due to accommodative monetary policy has created this crisis and the difficulties will be overcome by the abolition of restrictions on currency exchanges. The political promise of a 50% increase in civil servants' salaries only had an impact on the purchase of foreign currency and goods. According to Arkhipov and Abelsky (2011), the abolition of restrictions on currency exchanges is necessary given the current practice of going paperless in the middle and lending less money. During this period, the central bank is pumping more money into the local economy, which it already got from Russia's bailout plan. In addition, it adjusts its policy by allowing banks to maintain lower capital, thus allowing more money to lend and stimulate the economy. The Central Bank also increased ruble rates for those who had saved in dollars before the currency's devaluation and helped those who owned Belarusian rubles make purchases in dollars (Belarus removes currency restrictions, 2011). Foreign companies such as the automobile industry have many vehicles on their premises, but need additional foreign currencies, such as Euros or Dollars, to procure services and spare parts. The local ruble must strengthen its values, otherwise many foreign companies and multinationals will have to close their doors due to lack of access to foreign exchange..