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Abstract
In addition to facilitating exchanges of goods, services, and financial assets, effective payment systems play a major role in ensuring the soundness of financial systems by limiting the possibility of systemic crises, which could undermine confidence in financial institutions and markets. In the early 1990s, the 15 countries under review were beset with a number of payment system problems. Besides slowness of payment processing, there were, in particular, large interenterprise arrears, defaults, and fraud. A farther complication was the breakdown of the ruble area, which caused cash shortages in some countries and excess cash in others, depending on the timing of the introduction of national currencies. The final step in the breakup of the ruble zone occurred in June 1993 when Russia demonetized all pre-1993 ruble bank notes, expediting the departure of the zone’s last seven non-Russian members.
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