BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 36/2011:
Financial dollarization in Russia: causes and consequences
Alexey Ponomarenko ()
, Alexandra Solovyeva and Elena Vasilieva
Abstract: We review some aspects of financial dollarization in
Russia, applying the main relevant theories to analyze the dynamics of
several dollarization indicators. An econometric model of the short run
dynamics of deposit and loan dollarization is estimated for the last
decade. We find that ruble appreciation was the main driver of the
de-dollarization that occurred then and of the later episode of renewed
dollarization. We estimate the overall (and sectoral) currency mismatches
of the Russian economy. The results show a gradual improvement of the net
foreign currency position of the public sector, where we have seen
significant accumulation of international reserves by the Bank of Russia
and repayment of government debt. Evidence is also presented for the
significant currency risk vulnerability of the nonbanking private sector.
Several existing empirical studies are examined in order to assess the
growth losses of the Russian economy following the crisis of 2008, which
was linked with the financial dollarization.
Keywords: financial dollarization; currency mismatch; balance sheet effects; Russia; (follow links to similar papers)
JEL-Codes: E44; F34; G32; (follow links to similar papers)
38 pages, January 2, 2012
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