D. Mario Nuti illustrates the extraordinary progress made by central and eastern European economies in their trade and exchange regimes. Surprisingly, instant convertibility of exchange rates was established. In spite of diverse exchange rate regimes they have all experienced initial severe undervaluation ‐ the cost of speed and of unrestricted trade ‐ followed by rapid real revaluation and incipient protectionism. Since 1994 anembarras de richessehas appeared: high capital inflows which are either inflationary or costly to sterilise. Lower interest rates are recommen