Last year the same idea was launched, but it faded away when the radical Gaidar team introduced their program.
Under popular pressure to act now, while the ruble is losing ground by the hour, Yeltsin in his speech to parliament went back to his old idea.
On first sight it makes sense to limit the use of foreign currency on Russian soil. No one will argue with the president's remarks that the fall of the ruble has to stop. The type of inflation we are witnessing at the moment is wiping out whole sectors of Russian society.
To stabilize their local currency, countries in transition like Hungary and Romania introduced similar measures. But such measures were part of a reform package that included a tight fiscal policy, linked with restrictions on the use of the dollar. This might very well be the medicine this country needs.
But in Yeltsin's speech there was an unsettling undertone. The idea of a dollar ban seemed more a political gesture towards his conservative opponents in parliament and the strong industrial lobby. Their recipe for economic reconstruction is a return to the planned economy. The ban on hard currency in that perspective means closing the door to the world economy.
This would lead to more disaster. Almost every foreign company in Russia would find it impossible to work here, and foreign investment would come to a halt. It would cause a crisis for employers who need to pay their workers, for businesses in their financial relations abroad and of course for the retailers who are selling for dollars.
The infrastructure supporting foreigners who live here would disappear. Supermarkets would close, the real estate business would dry up. The whole nascent market would have to shut down.
For the moment Yeltsin's remarks seem to be mostly for internal political consumption.
There is no doubt about the seriousness of the ruble devaluation.
And it is indeed desirable to remove the dollar as Russia's second currency. But to go back to the old days is no remedy. and if the dollar is banned now it will only stimulate crime and the black market.
The only way to save the ruble is to restore confidence in Russia's reform policy, stimulate privatization and get this economy going.
Only then will people be prepared to put their trust in the ruble.
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