| Description |
1 online resource (30 pages) |
| Series |
IMF Working Paper ; WP/18/21 |
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IMF working paper ; WP/18/21.
|
| Contents |
Cover; Contents; Abstract; I. Introduction; II. The Concept of Euroization; A. Review of the Economic Literature on Euroization; B. Measuring Euroization in Albania; III. Euroization Drivers in Albania; A. An Empirical Measure of the Optimal Euroization Level; B. Macroeconomic Euroization Drivers; C. Mispricing of Foreign Exchange Risk; IV. An Effective Policy Response; A. Macroeconomic Policies; B. Prudential Measures; V. Conclusion; REFERENCES; Figures; 1. Causes of Euroization; 2. Evolution of Foreign Currency Deposits as a Share of Total Deposits |
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3. Share of Foreign Currency Lending by Bank Ownership and New Credit Flow4. Actual and Benchmark Euroization Levels; 5. Two-way Risk in the Foreign Exchange Market; 6. Deposit Euroization and Interest Rate Differential-Time Series; 7. Deposit Euroization and Interest Rate Differential-Correlation; 8. Deposit Euroization and Minimum Variance Portfolio; 9. Risk Premia on Foreign Currency Loans and Exchange Rate Developments; 10. Lek Minus Euro Intermediation Spread; 11. Structure of Banks' Sources of Foreign Currency Funding by Ownership; 12. Causes of Euroization and Policy Responses; Tables |
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1. Results of the Panel Regressions2. Interest Rate Spread as a Determinant of Financial Euroization; 3. Minimum Variance Portfolio and its Components in European Countries; Boxes; 1. Estimates of the Seignoriage Losses Due to Euroization |
| Summary |
This paper proposes a methodology to develop empirically based and theoretically consistent deeuroization policies. It is derived from the experience of Albania. The paper is the first attempt to provide an empirical measure of the optimal level of euroization. The results indicate that euroization is trending above the estimated measure in Albania, calling for deeuroization policies. In the long term, deeuroization requires maintaining the commitment to low and stable inflation in a context of greater exchange rate flexibility to encourage saving in local currency. In the short term, policies that mitigate the financial stability risk due to euroization contribute to deeuroization inasmuch as they make banking intermediation in euro less financially attractive to the public |
| Notes |
Available in PDF, ePUB, and Mobi formats on the Internet |
|
Online resource; title from PDF title page (IMF, viewed Apr. 30, 2020) |
| Subject |
Euro -- Albania
|
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Monetary policy -- Albania
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Monetary policy -- Europe
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Financial security -- Europe
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Euro
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Financial security
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Monetary policy
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Dollarization.
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Central Banks And Their Policies.
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Financial Stability.
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Albania
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Europe
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Europe.
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Albania.
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| Form |
Electronic book
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| Author |
Kota, Vasilika, author.
|
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Cabezon, Ezequiel, author.
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Guo, Shaoyu, author
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Veyrune, Romain, author.
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International Monetary Fund.
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| ISBN |
1484338723 |
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9781484338728 |
|
148433941X |
|
9781484339411 |
|
