Kalistani Major History

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Kalistani President Orders Banks Reopened, Devalues RubleReina-Rodriguez notes that Kalistan is not out of the woods yet
Kaliburg, Ananto
May 3, 4440


President of the Republic expresses confidence in the Ruble

The President of the Republic has ordered the Finance Minister to reopen the Banks, on a limited Basis.  Starting May 20th, all branches of the Republican National Bank will open for 4 hours a day.  Withdrawals will be limited to 5% of available balances per day, and checks may be cashed and deposited without limit.  The reopening of the banks is coupled with a large devaluation of the Kalistani currency:  In April, the Finance Minister released more than 300 Billion new Kalistani Rubles, to be exchanged for old ones at a 7.3:1 new to old basis.  District Scrip was not accepted in exchange, but will be accepted at all Republican Banks in the form of deposit, where they will automatically be converted to new Rubles.

The Finance Ministry's plan is to flood the economy with cheaper Rubles to begin to stimulate imports, including capital imports, and will aim at encouraging local investors to get back into the game.  Devaluation is also aimed at kickstarting Kalistani industries.  As large investments from Telamon and New Endralon flood into the country, and old stocks are being snatched up at bargain basement prices, the devaluation of the currency will boost inflation and increase domestic demand, which should boost hiring.

The immediate inflationary shock to the system caused by the devaluation of the Ruble and the sudden liquidity in the monetary markets caused a small spike in Kalistani indices, but gains were wiped out in the sell-off which followed.  Lower prices will mean in the near term more buying, and now that Kalistanis will have more access to cash, Kalistanis will begin investing.  The temporary inflation caused by the flood of hard money in the economy will be offset later this year as increased taxes pull a lot of that currency back, but within a couple months, the Finance Minister expected to see an increase of hiring and investing.

The President stressed that Kalistan is still not out of the woods.  "Its touch and go, and unfortunately, we are now expecting that it will be several years before Kalistan is fully recovered, but there are some promising signs to the increase in liquidity.  As we flood the economy with cash, we expect to see easier spending.  It will take a lot of time for these effects to trickle into the economy, and meanwhile, we will have to keep close watch on the economy.  We are not out of the woods yet.  But we have a heart beat."