Monetary overhang
Encyclopedia
Monetary overhang is a phenomenon where people have money holdings due to the lack of ability to spend them. This is a phenomenon often present with repressed inflation and was a common occurrence in the Soviet Union
. The solution to this is usually a swift burst of inflation
.
In the Soviet Union, which was dissolved in 1990/1991, monetary overhang led to hyperinflation. The International Monetary Fund (IMF) subsidised the currency to stabilise it, but Russia chose to leave this arrangement in 1998.
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
. The solution to this is usually a swift burst of inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
.
In the Soviet Union, which was dissolved in 1990/1991, monetary overhang led to hyperinflation. The International Monetary Fund (IMF) subsidised the currency to stabilise it, but Russia chose to leave this arrangement in 1998.