Dual Systems of International Settlements: an analysis of Yugoslavia’s experience and some proposals for more efficient alternative settlement systems

Abstract

Yugoslavia operates two or even three substantially different settlement systems for its international transactions. The overwhelming part of visible and invisible trade with the OECD and most developing countries, as well as capital transactions with these two groups of countries, are invoiced and settled in freely convertible currencies. Yugoslavia’s trade with socialist countries of Eastern Europe (CMEA countries) is mostly settled through bilateral clearing arrangements. Official bilateral clearing arrangements still operate with five CMEA countries: Albania, Czechoslovakia, the GDR, the Soviet Union, and Mongolia. According to these arrangements, all current accounts and ‘financial’ transactions among partner countries should be settled through bilateral clearing.