scholarly journals Euroisation in the Western Balkans: The Evidence for Macedonian Economy

2017 ◽  
Vol 8 (2) ◽  
pp. 307-315
Author(s):  
Tatjana Boshkov ◽  
Zoran Temelkov ◽  
Aleksandra Zezova
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Extended Period ◽  
Emerging Countries ◽  
Western Balkans ◽  
Balkan Countries ◽  
High Level ◽  
Benefits And Costs ◽  
Prudential Policy

Abstract Euroisation is a problem with a long history and usually persistent phenomena. The high level of euroisation is common in emerging countries in Europe as in the countries with fixed exchange rate regime. In Western Balkan countries have been identified a strong presence of foreign currency. The fact is that transactions could take a place outside of the banking channels, which is not a case for FX-loan and FX-deposit ratios. It’s difficult to measure how much foreign money is in the economy. This is the reason to use data for currency substitution index. This index is high for Macedonia indicating high level of real euroisation. After the crisis, the levels are reduced (lower remittances from abroad). Considering the exchange rate experience of Macedonia, it’s likely to remain significantly euroised country for an extended period. IMF considers appropriate strategy which provides support for the gradual de-euroisation in maintaining macro-prudential policy and development of the domestic market. Another important strategy is the maintenance of prudent policies that mitigate foreign currency risks. The paper shows the persistence of FX mainly in Macedonian economy and discusses about benefits and costs, in light of the recent economic crisis.

scholarly journals EFFECTS OF FOREIGN CURRENCY EXCHANE RATES ON COMPETITIVENESS OF THE REPUBLIC OF SERBIA IN INTERNATIONAL BUSINESS

2019 ◽  
Vol 7 (12) ◽  
Author(s):  
Aleksandar Gajić ◽  
Radica Pavlović
Keyword(s):  
Economic Policy ◽  
Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Balance Of Payments ◽  
Economic Policies ◽  
The Exchange Rate ◽  
The Republic ◽  
High Level

In the era of globalization and international flows that carry the liberalization,deregulation and increased impact of international monetary institutions, as well asthe general macroeconomic environment and economic policies of the nationaleconomy have been crucial to the economic competitiveness in the internationalmarket. Exchange rate policy, as one of the factors of economic policy, has significantimplications for competitiveness, balance of payments and indebtedness. In thisregard, the purpose of this paper is to point out the exchange rate regime of theRepublic of Serbia, which has, by appreciation of currency reduced thecompetitiveness of domestic product, balance of payments deficit and a high level ofindebtedness. The work methodology is based on the processing of secondary datapublished in public sources for the period 2001-2012 of the Republic of Serbia inorder to obtain a representation of the analyzed data. The research results indicate thatthe real exchange rate of the dinar is almost double the official rate, and there is noparticular interest in exporting local products. Therefore, the monetary and foreignexchange as well as the overall economic policy appears as a catalyst for thedevelopment of Serbia's competitiveness in the international market, and it can beconcluded that the monetary-and-foreign exchange policy has not achieved economicobjectives although the stability of the exchange rate as a positive measure isconstantly emphasized by economic policy makers. The alleged stability cost Serbia alot, as evidenced by data from the balance of payments: a high deficit, high externaldebt and consequential debt slavery of Serbia.

scholarly journals Exchange rate regime proposal for emerging countries: a Keynesian perspective

2008 ◽  
Vol 31 (2) ◽  
pp. 227-248 ◽  
Author(s):  
Fernando Ferrari-Filho ◽  
Luiz Fernando De Paula
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Emerging Countries

Parallel stories: FX lending to households in Poland, Romania and Hungary, 1997–2011

2013 ◽  
Vol 63 (3) ◽  
pp. 257-286 ◽  
Author(s):  
András Hudecz
Keyword(s):  
Exchange Rate ◽  
Central And Eastern Europe ◽  
Foreign Currency ◽  
Local Development ◽  
Exchange Rate Regime ◽  
Short Review ◽  
Flexible Exchange Rate ◽  
Critical Assessment ◽  
Empirical Literature ◽  
Regulatory Measures

The analysis of household foreign currency (FX) lending begins with a short review of the theoretical and empirical literature. I investigate the factors that have helped or hindered such lending, particularly in Central and Eastern Europe. The study goes on to look at the experiences in Poland, Romania and Hungary. The choice is based on the fact that all three countries operate a flexible exchange rate regime and that household FX lending is prevalent in all of them. The analysis of each country touches upon the factors that have contributed to the local development of FX borrowing. However, the study focuses on the regulatory measures taken to curb such lending. The study concludes with a review and critical assessment of the policies that have been adopted with an eye to solving social and economic difficulties arising from FX indebtedness.

scholarly journals Foreign currency regimes

2004 ◽  
Vol 47 (3-4) ◽  
pp. 233-248
Author(s):  
Duska Gajic
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Currency Union ◽  
Final Conclusion ◽  
Currency Board ◽  
Target Zone ◽  
Advantages And Disadvantages ◽  
Theoretical Analyses ◽  
Negative Outcome

There is no exchange rate regime that can be declared as the best one. Each regime has both advantages and disadvantages. In some situations, a regime can be very positive and in an other, it may have rather negative outcome. In the theory, regimes are classified as follows: currency union, currency board, "truly fixed", adjustable peg, crawling peg, basket peg, target zone, dirty float, free float. This paper addresses "fixed vs. flexible regime" issue and provides description of all the requirements, consequences, benefits, weaknesses and possibilities related to them. The final conclusion is that flexible regimes are more frequently used and preferred by most economists. After all theoretical analyses, policymakers are those who make decisions about the optimal exchange rate regime for the economy concerned.

Exchange Rate Regime Preferences and Budget Deficits in Open Economies

2021 ◽  
pp. 65-89
Author(s):  
Mustafa Kiziltan
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Trade Openness ◽  
Open Economies ◽  
Demographic Factors ◽  
Generalized Least Squares ◽  
Budget Deficits ◽  
Fiscal Discipline ◽  
Exchange Rate Shocks ◽  
High Level

This study investigates the impacts of exchange rate regime (ERR) choice, economic, institutional, and demographic factors on the budget deficit. The recent literature states that fiscal discipline is affected by the ERR preferences in open economies. In this study, the effect of de facto ERR preferences on fiscal discipline were analyzed between 1995 and 2016 for 76 countries classified into income groups. The estimates by Feasible Generalized Least Squares and Panel Corrected Standard Errors estimators show that flexible ERRs provide much more fiscal discipline. The findings highlight the importance of institutional quality, demographic factors, and inflation to ensure fiscal discipline. A country with a high level of trade openness is more vulnerable to exchange rate shocks, which leads to uncertainty in the fiscal policy. The results confirm that ERR preferences affect countries' fiscal disciplines differently, depending on the countries' characteristics.

scholarly journals Dollarization and the Zimbabwe’s Economy

2013 ◽  
Vol 5 (6) ◽  
pp. 398-405 ◽  
Author(s):  
Mike Nyamazana Sikwila
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Recent Literature ◽  
African Countries ◽  
Legal Tender ◽  
Macroeconomic Imbalances ◽  
Economic Stabilization ◽  
The Impact ◽  
Benefits And Costs ◽  
Insight Into

This paper examines the economic impact of the inception of the full dollarization1 in Zimbabwe’s economy after the effects of hyperinflation and an unprecedented depreciation of an exchange rate between 2000 and 2008. Dollarization is a generic word implying the use of any foreign currency as legal tender instead of the domestic currency. An analytical qualitative approach was adopted for this study. The analysis of the benefits and costs of dollarization to Zimbabwe’s economy revealed how dollarization has impacted on the stabilization of Zimbabwe’s economy. This article also highlights the fact that Zimbabwe is not the only country in Africa that has had to resort to adopting foreign currency as legal tender in an effort to remedy macroeconomic imbalances. To our knowledge, there is scant literature on dollarization in Africa and this is the reason why we have chosen to examine the impact of dollarization on Zimbabwe’s economy. In addition, we add to Kurt Schuler’s work (2005) by indicating the other African countries that had adopted dollarization over the years. Furthermore, the study offers support to recent literature that asserts that economic stabilization in these countries resulted from the impact of dollarization. The results of the study revealed that dollarization positively impacts on the country’s economy. In particular, this study is important to policymakers in that it sheds some insight into the importance of a strong currency and stable exchange rate for the stabilization of economies that experienced hyperinflation.

scholarly journals Relationships between exchange rate regime, real exchange rate volatility and currency structure of government bonds in emerging markets

2020 ◽  
Vol 20 (1) ◽  
pp. 3-22
Author(s):  
Viktar Dudzich
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Real Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Exchange Rate Volatility ◽  
Exchange Rate Policy ◽  
Original Sin ◽  
Rate Policy ◽  
Real Exchange Rate Volatility

AbstractPublic foreign currency borrowing is a common problem of emerging markets. Scholars named it the original sin of foreign debt. It has a proven negative influence on economic growth and development, undermining financial stability, and increasing the probability of monetary crises. The roots of the original sin often lay in emerging markets’ institutional underdevelopment, with low-quality monetary policy, inappropriate exchange rate regime choice, and exchange rate mismanagement being stated among the most important causes. This paper evaluates the influence of the exchange rate policy on the emission of foreign currency sovereign bonds in emerging markets. The relationship is estimated using panel data and GMM approach, with exchange rate regime type (both de jure and de facto) and real exchange rate volatility serving as explanatory variables. The findings reveal that fixed exchange rate regime and high real exchange rate volatility is promoting the foreign currency borrowing. Thus countries that want to reduce the burden of the original sin should lean towards a more flexible exchange rate policy while maintaining their real exchange rate stable.

The Foreign Currency Exchange Rate Policy Up Until 1986

2020 ◽  
pp. 209-229
Author(s):  
Einar Lie
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
International Exchange ◽  
Currency Exchange ◽  
Currency Exchange Rate ◽  
Rate Policy ◽  
The Government

This chapter studies how Norges Bank came to play a central, technical role in maintaining and defending a stable krone exchange rate during the years 1946–86. This role was reflected in how the bank advised on the basis of a loyal position to the fixed krone exchange rate regime and to binding international exchange rate cooperation. In 1978, Norway backed out of the European fixed exchange rate cooperation, and during 1976–86, the krone was devalued ten times. Even though Norges Bank officially came to contribute to both recommending and carrying out this policy, the policy defied the strong ideals and viewpoints of the organization. The exchange rate policy, and the problems it led to in relation to the central bank, caused the government, in the first half of the 1980s, to push Norges Bank completely aside when it came to the shaping of Norwegian exchange rate policy. Nevertheless, much of the policy was still shaped inside the walls of the institution.

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