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:
“When truth is nothing but the truth, it’s unnatural, it’s an abstraction that resembles nothing in the real world. In nature there are always so many other irrelevant things mixed up with the essential truth. That’s why art moves you—precisely because it’s unadulterated with all the irrelevancies of real life.”
—Aldous Huxley (1894–1963)