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:
“Memory is a wonderfully useful tool, and without it judgement does its work with difficulty; it is entirely lacking in me.... Now, the more I distrust my memory, the more confused it becomes. It serves me better by chance encounter; I have to solicit it nonchalantly. For if I press it, it is stunned; and once it has begun to totter, the more I probe it, the more it gets mixed up and embarrassed. It serves me at its own time, not at mine.”
—Michel de Montaigne (1533–1592)