Baltic–Soviet relations military measures." In mid-June 1940, when international attention was focused on the German invasion of France, Soviet NKVD troops raided border posts in Lithuania, Estonia and Latvia. State administrations were liquidated and replaced by Soviet cadres, Elections were held with single pro-Soviet candidates listed for many positions, with resulting peoples assemblies immediately requested admission into the USSR, which was granted by the Soviet Union. Germany invaded and occupied the territories of Baltic states in 1941 during "Operation Barbarossa". At the beginning the Lithuanians, Latvians and Estonians hoped that the Germans would reestablish Baltic independence. Such political hopes soon evaporated and
Currency substitution displaced by a stable currency. At the beginning of this process, the store-of-value function of the domestic currency is replaced by the foreign currency. Then, the unit-of-account function of the domestic currency is displaced when many prices are quoted in a foreign currency. A prolonged period of high inflation will induce the domestic currency to lose its function as medium of exchange when the public carries out many transactions in foreign currency. Ize and Levy-Yeyati (1998) examine the determinants of deposit and credit currency substitution, concluding that currency substitution is driven by the volatility of inflation and the real exchange