Taking Stock of Monetary and Exchange Rate Regimes in Emerging Europe

Taking Stock of Monetary and Exchange Rate Regimes in Emerging Europe
Author: Nazim Belhocine
Publisher: International Monetary Fund
Total Pages: 52
Release: 2016-11-29
Genre: Business & Economics
ISBN: 1475556624

The demands on monetary and exchange rate regimes in CESEE have evolved, in line with the region’s development. In the 1990s, the immediate challenge was to rein in excessive inflation following transition, and to establish basic monetary order. These objectives have been achieved, owing largely to successful exchange rate–based stabilization. With this accomplished, the focus has shifted to cyclical monetary management, and to appropriately managing monetary conditions during CESEE’s growth and income convergence to the euro area. Flexible exchange rates—and the ensuing capacity of monetary conditions to adapt to the economies’ needs—are likely to remain advantages, especially to extent that CESEE’s GDP and income levels will resume convergence to the euro area. Once this process restarts, tighter monetary conditions will again be needed to limit goods and asset price inflation, and to contain growth imbalances.

Taking Stock of Monetary and Exchange Rate Regimes in Emerging Europe

Taking Stock of Monetary and Exchange Rate Regimes in Emerging Europe
Author: Nazim Belhocine
Publisher: International Monetary Fund
Total Pages: 52
Release: 2016-11-29
Genre: Business & Economics
ISBN: 1475557892

The demands on monetary and exchange rate regimes in CESEE have evolved, in line with the region’s development. In the 1990s, the immediate challenge was to rein in excessive inflation following transition, and to establish basic monetary order. These objectives have been achieved, owing largely to successful exchange rate–based stabilization. With this accomplished, the focus has shifted to cyclical monetary management, and to appropriately managing monetary conditions during CESEE’s growth and income convergence to the euro area. Flexible exchange rates—and the ensuing capacity of monetary conditions to adapt to the economies’ needs—are likely to remain advantages, especially to extent that CESEE’s GDP and income levels will resume convergence to the euro area. Once this process restarts, tighter monetary conditions will again be needed to limit goods and asset price inflation, and to contain growth imbalances.

Carry Trade vs. Deposit-Driven Euroization

Carry Trade vs. Deposit-Driven Euroization
Author: Ms.Nan Geng
Publisher: International Monetary Fund
Total Pages: 29
Release: 2018-03-15
Genre: Business & Economics
ISBN: 1484345266

Financial “euroization”—or “dollarization” outside of Central and Eastern Europe—is typically analyzed as a singular phenomenon that can be traced to a common set of factors. This paper argues that two types of euroization need to be distinguished, which have different causes, economic consequences, and policy implications: carry trade euroization that emerges when households and corporations seek to exploit interest rate differentials between foreign currency loans and local currency deposits, and deposit-driven euroization that is rooted in distrust in the local currency as a savings vehicle. We present a theoretical framework that sketches key features of both euroization types, and test it with data from 28 Emerging European and Central Asian economies.

Negative Interest Rates

Negative Interest Rates
Author: Luís Brandão Marques
Publisher: International Monetary Fund
Total Pages: 84
Release: 2021-03-03
Genre: Business & Economics
ISBN: 1513570080

This paper focuses on negative interest rate policies and covers a broad range of its effects, with a detailed discussion of findings in the academic literature and of broader country experiences.

Exchange Rate Regimes in Central, Eastern and Southeastern Europe

Exchange Rate Regimes in Central, Eastern and Southeastern Europe
Author: Mr.Slavi T Slavov
Publisher: International Monetary Fund
Total Pages: 31
Release: 2017-03-31
Genre: Business & Economics
ISBN: 1475590954

There are 13 countries in Central, Eastern and Southeastern Europe (CESEE) with floating exchange rate regimes, de jure. This paper uses the framework pioneered by Frankel and Wei (1994) and extended in Frankel and Wei (2008) to show that most of them have been tracking either the euro or the US dollar in recent years. Eight countries, all of them current or aspiring EU members, track the euro. Of the five countries keying on the US dollar in various degrees, all but one belong to the Commonwealth of Independent States. The paper shows that the extent to which each country’s currency tracks the euro (or the dollar) is correlated with the structure of its external trade and finance. However, some countries appear to track the EUR or USD to an extent which appears inconsistent with inflation targeting, trade or financial integration, or the extent of business cycle synchronization. The phenomenon is particularly pronounced among the countries in the CESEE euro bloc, which may be deliberately gravitating around the euro in anticipation of eventually joining the Euro Area.

30 Years of Transition in Europe

30 Years of Transition in Europe
Author: Robert Holzmann
Publisher: Edward Elgar Publishing
Total Pages: 256
Release: 2020-11-27
Genre: Business & Economics
ISBN: 1839109505

This thought-provoking book investigates the political and economic transformation that has taken place over the past three decades in Central, Eastern and Southeastern Europe (CESEE) since the fall of the Iron Curtain. Through an examination of both the successes and shortcomings of post communist reform and the challenges ahead for the region, it explores the topical issues of economic transition and integration, and highlights lessons to be learned.

The Economic Crisis and its Aftermath in the Nordic and Baltic Countries

The Economic Crisis and its Aftermath in the Nordic and Baltic Countries
Author: Hilmar Hilmarsson
Publisher: Routledge
Total Pages: 251
Release: 2018-09-25
Genre: Political Science
ISBN: 1351046810

The Nordic-Baltic region has become highly integrated. The Nordic countries have been successful in balancing competitiveness and economic growth with social inclusiveness, while the Baltic States have grown economically but remain vulnerable with weak social systems and highly unequal income distribution. European Union (EU) membership and inter-linkages with the continental Nordic banking systems appear to have affected the 2008/09 crisis response of the Baltic States. In spite of their strengths, including their social systems, continental Nordic states are faced with a challenging mix of large, cross-border banks and highly indebted households at a time of rather weak global growth. The Baltic States are challenged by slow economic growth post-crisis, security concerns, and large-scale outward migration of the youngest and most highly educated people. It is now a decade since the Baltic States were hit by the global crisis. It is time to take stock of their progress and assess their relations with other countries in the region and with the EU. This book focuses on the Baltics and their Nordic partners pre- and post-crisis: successes, failures, lessons learned, and future challenges, examining and comparing the crisis response of these various small states that enjoy different income levels, operate different welfare and tax systems, and seek different levels of integration with the EU.

Regional Economic Outlook, November 2017, Europe

Regional Economic Outlook, November 2017, Europe
Author: International Monetary Fund. European Dept.
Publisher: International Monetary Fund
Total Pages: 150
Release: 2017-11-13
Genre: Business & Economics
ISBN: 1484319613

The European recovery is strengthening and broadening appreciably. Real GDP growth is projected at 2.4 percent in 2017, up from 1.7 percent in 2016, before easing to 2.1 percent in 2018. These are large upward revisions—0.5 and 0.2 percentage point for 2017 and 2018, respectively—relative to the April World Economic Outlook. The European recovery is spilling over to the rest of the world, contributing significantly to global growth. In a few advanced and many emerging economies, unemployment rates have returned to precrisis levels. Most emerging market European economies are now seeing robust wage growth. In many parts of Europe, however, wage growth is sluggish despite falling unemployment.

Late to the game? Capital flows to the Western Balkans

Late to the game? Capital flows to the Western Balkans
Author: Zsoka Koczan
Publisher: International Monetary Fund
Total Pages: 26
Release: 2017-04-07
Genre: Business & Economics
ISBN: 1475593503

The boom and bust in capital flows to the New Member States of the European Union have received a considerable amount of attention; foreign direct investment and bank flows to the region and countries’ participation in regional supply chains have been well-documented. Relatively little has, however, been written about capital flows to the Western Balkans economies, which are often perceived to be ‘late arrivals’ to large capital flows. This paper aims to examine how capital flows to the Western Balkans compare with flows to the New Member States, in terms of levels as well as dynamics. We find that while financial integration took off somewhat later in the Western Balkans than in the New Member States, it has increased rapidly, despite still much lower capital account openness. Capital inflows as a share of GDP are comparable to those observed in the New Member States, (perhaps surprisingly) diverse in terms of source countries and broadly similar in composition, though with equity shares higher than they were in the New Member States at comparable levels of GDP per capita.