As a group, the Baltics, Russia, and other countries of the former Soviet Union have achieved substantial progress in the areas of convertibility, foreign exchange market development, and central bank foreign exchange operations over the last six years. The institutional arrangement for an efficient market-based allocation of foreign exchange is in place in most countries; payments and transfers for current account transactions are free of restrictions, except in a limited number of countries; and several countries maintain a liberal system for capital account transactions, or interpret liberally the restrictions in place. Nominal exchange rates have begun to stabilize in most countries (Figure 3.1). The ratio of gross international reserves to imports also indicates that countries are moving to macroeconomic stabilization (Table 3.1). Foreign exchange markets are usually shallow, however, with banking unsoundness often an obstacle to market deepening.