Ukraine needs a lifeline -- now

One way to increase the chances of a prosperous future in Ukraine is to strengthen the nation’s currency, the hryvnia—for a stable monetary foundation is necessary for economic growth. Even as the value of the Russian ruble has fallen almost 9% against the dollar in 2014, Mr. Putin takes comfort in knowing that the hryvnia is doing worse: It has plummeted 35% against the dollar since January. The currency’s weakness is part of his plan to bring Ukraine to its knees.

This is where America and our European allies can throw a wrench into Mr. Putin’s designs, rather than standing idly by as the hryvnia collapses under physical and psychological intimidation from Russia. We should encourage the establishment of a Ukrainian currency board, an institutional arrangement that anchors the value of national money to a more stable currency. Under a currency board, the hryvnia would be convertible into the dollar or the euro at a fixed rate, and backed by Ukraine’s own hard currency reserves. The International Monetary Fund would supplement the reserves with a special-purpose loan arrangement.

A currency board would help Ukraine’s money become as reliable and stable as the world’s dominant reserve currencies. The effects would ripple throughout the economy: Foreign investors could have confidence that the hryvnia is not in a death spiral, and Ukrainians would know that Mr. Putin cannot annihilate the value of their personal savings.