Understanding IAS 29 per
PricewaterhouseCoopers: Correction 10: People do not accumulate wealth in a
stable foreign currency during hyperinflation
‘Characteristics of
hyperinflation
There is no absolute definition of hyperinflation. The characteristics
identified in IAS 29 are as follows:
• People accumulate wealth in non-monetary assets or in a stable
foreign currency;’
PricewaterhouseCoopers
Understanding IAS 29 2006 p3
Correction
Generally people do not accumulate wealth in a stable
foreign currency. It is often forbidden and a crime to accumulate wealth in a
stable foreign currency in a country with hyperinflation.
If what PricewaterhouseCoopers state above was true,
then it would be no problem dealing with hyperinflation in a hyperinflationary
country. Often the single biggest problem in a hyperinflationary country is
that it is a crime to trade in and to hold especially the US Dollar.
It would be relatively easy to solve the monetary
problem of hyperinflation if it were always legal to hold and freely trade in
especially the US Dollar in hyperinflationary countries. All people would have
to do would be to buy US Dollars every end of the day with excess local currency.
Nicolaas Smith
Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
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