“…The theoretical argument and the focus on exchange rate policy as proxy of monetary commitment can be forcefully made for CEEC/CIS transition economies, where EXR commitment has been explicitly used as anchor/commitment technique in the absence of inherited institutional credibility and in the presence of domestic instability in the early phase of transition (see, for instance, Allard, 2009, and as an early source Hobza, 2002, andNational Bank of Hungary, 2002). 1 Since transition economies are frequently exposed to foreign exchange risks, pegging may reduce transaction costs and stimulate domestic economic activity through an increase in trade or capital inflows (Jurtyk and Fritz-Krockow, 2004). From a theoretical point of view, disinflation through pegging the exchange rate is equivalent to disinflation through reducing monetary growth in case of an initial currency revaluation.…”