Even those countries hailed a few years ago for having stabilized their currencies, such as the Czech Republic and Russia, have since experienced currency crises that have required either devaluation or extensive foreign aid. The wide use of the U.S. dollar and the German mark as stores of value and media of exchange in most former socialist economies is another indication of poor monetary policy. The value of trade in dollars purely within Russia was estimated to be twice the value of trade in rubles even before the latest ruble crisis. In the wide sense, monetary policy also includes bank regulation. In most former socialist economies the banking system remains fragile and rather backward.
Governments restrict foreign competition to protect market share for locally owned banks.
By doing so, however, they slow the pace of innovation and deny depositors the stability that banks with international branches offer. Governments have chosen to rescue rather than close many insolvent banks. Though there has been no systematic study on the question, the high cost of many bank rescues suggests that closing banks is more efficient than rescuing them. The Washington institutions have spent large amounts of time, energy, and money trying to improve monetary policy in former socialist economies. Despite it all, in most cases, monetary policy in the recipient countries has been much worse than it would have been by simply importing sound monetary performance through currency boards or dollarization, and importing a good banking system by allowing the world's leading banks to buy or compete freely with domestic banks.