Mixed Currencies
Because hard currencies may be subject to legal restrictions, the desire for transactions in hard currency may lead to a black market. In some cases, a central bank may attempt to increase confidence in the local currency by pegging it against a hard currency, as is this case with the Hong Kong dollar or the Bosnia and Herzegovina convertible mark. This may lead to problems if economic conditions force the government to break the currency peg (and either appreciate or depreciate sharply) as occurred in the Argentine economic crisis (1999–2002).
In some cases, an economy may choose to abandon local currency altogether and adopt a hard currency as legal tender. Examples include the adoption of the US dollar in Ecuador, El Salvador and Zimbabwe and the adoption of the German mark and later the euro in Kosovo and Montenegro.
Read more about this topic: Hard Currency
Famous quotes containing the word mixed:
“But oh, not the hills of Habersham,
And oh, not the valleys of Hall
Avail: I am fain for to water the plain.
Downward, the voices of Duty call—
Downward, to toil and be mixed with the main,
The dry fields burn, and the mills are to turn,
And a myriad flowers mortally yearn,
And the lordly main from beyond the plain
Calls o’er the hills of Habersham,
Calls through the valleys of Hall.”
—Sidney Lanier (1842–1881)