Free Open Forum 4 Essay Sample
I would support the establishment of a currency board in Ukraine. The currency board would enable Ukraine to strengthen its currency. A strong currency will enable Ukraine to have a positive economic growth. Ukraine’s currency is known as hryvnia, and it has been falling at a very fast rate. Russia is a threat to the sovereignty of Ukraine despite experiencing a fall in its own currency. The establishment of a currency board in Ukraine will enable Ukraine to build a strong foundation for the hryvnia by providing the base of a stable currency. The currency board will enable the conversion of hryvnia to either the euro or the dollar at a fixed rate. The hryvnia will also be backed by the hard currency reserves of Ukraine. A special-purpose loan will be arranged by the International Monetary Fund (IMF) so as to supplement the Ukrainian reserves.
The establishment of a currency board in Ukraine will enable the hryvnia to become stable and reliable just like other dominant currencies in the world. The hryvnia will cause economic ripples that will attract foreign investors. The people of Ukraine will gain confidence and increase their savings. Ukraine will encourage free markets and free people due to the stability gained by hryvnia. On the other hand, Russia would become vulnerable, and no longer a threat to Ukraine. The hryvnia will become stronger than the Russian currency.
There have been success stories by countries such as Lithuania, Estonia, Bulgaria, and Bosnia-Herzegovina due to the establishment of currency boards. The IMF can work together with the Treasury Department so as to achieve success in the establishment of a currency board in Ukraine. A currency board will also help IMF to avoid wastage caused by financial aid to unstable economies.