Departures from the ruble zone: the implications of adopting independent currencies

The economic and political implications of the decision to depart from the ruble zone by Russia and other Former Soviet Union (FSU) countries is examined. It is shown that such a decision will generate large income and output contractions for Baltic states, while minimal effects will be experienced by Kazakhstan and Turkmenistan. Short-term cost and benefit analysis indicates a likely return to the zone by the former countries, while the latter will establish new currencies.