Central banking in transition economies: Estonia and Belarus

Purpose - The purpose of this paper is to consider the difference in the development of the central bank in two states in transition from communism to capitalism and from being parts of the Soviet Union to being independent states.Design methodology approach - Data and theoretical analysis were gathered from various sources in order to evaluate the approach to central banking taken by these two countries.Findings - Substantial variations were found in the resulting monetary policies and rates of inflation which demonstrate the differences in the institutions developed and illustrate the importance of independence for the central bank.Originality value - The contrasting experience of Belarus and Estonia, both of which gained independence from the Soviet Union in 1991, provide examples of success and failure in this endeavor, thus providing valuable insight to those involved with transitioning economies.