Exporting stability to the European neighborhood – the role of deposit euroization in CESEE revisited after 25 years of EMU

We review the prevalence of deposit euroization in ten Central, Eastern and Southeastern European (CESEE) economies since the inception of the euro area, using both macro and micro data. Specifically, we calculate the ratio of foreign currency deposits to total resident non-MFI deposits for households and nonfinancial corporates, and we build on findings from the OeNB Euro Survey. The macro data confirm that the relevance of deposit euroization continues to differ strongly across countries. The levels of deposit euroization are lowest in the inflation-targeting economies of Czechia, Hungary and Poland, while high and persistent levels of deposit euroization are observed in the Western Balkan economies of Albania, Bosnia and Herzegovina, North Macedonia and Serbia. Our micro evidence broadly confirms the macro picture, yet it further suggests that euro deposits are rather unequally distributed across the population and likely to be held more often by more affluent individuals.