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Re: the theory of split currency





On Mon, 30 Sep 1996, James A. Donald wrote:

> Fred Foldvary <[email protected]> wrote:
> > Is there a name for a dual or split currency, in which
> > there is one currency for domestic use and another, different
> > appearing, currency for foreign usage?
> >
> > Does anyone know of any country which has had such a
> > split currency?
> 
> Many third world nations employed this system, one currency 
> for internal use only, and one currency for international 
> transactions.  The international currency was sometimes 
> denominated in hard currency, and reasonably convertible into it.
> 

<some snipped>

> 
> I speculate that this is because people find that they *must* 
> obtain foreign currency, the internal currency being
> unspendable, and any method available to them for obtaining foreign
> currency is a criminal offense.
> 

This is just another method of a fixed exchange rate system, with the 
inevitable resulting black market for foreign currency.

Just my US$0.02 :)

-r.w.