FORMAL AND INFORMAL MONETARY INSTITUTIONS IN TRANSITION - THE CASE OF GEORGIA

To analyze Post-communist transition process, one of the main important determinant is time to achieve macroeconomic stabilization, which is primarily related to the stable and low rate of inflation. The reduction of hyperinflation improves the achievement of positive economic growth. This empirical evidence shows us that positive economic output growth is not possible without price stability. All post-soviet Countries firstly solve inflationary problems and then thought about future economic growth. Post-communist transition became irreversible after the Soviet collapse. Because Russia had the monetary policy tools, Soviet Ruble remained until 1998, when the Ruble reform was implemented during the Russian financial crisis. Other countries, in some cases had the coupons instead of national currency at the first stages of transition. What is the role of the independent monetary policy and national currency and stable inflation in the currency hyperinflation? How formal and informal monetary intuitions are changing over the time?