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Estimating a Natural Level of Financial Dollarization in Ukraine

Author

Listed:
  • Kostiantyn Khvedchuk

    (National Bank of Ukraine)

  • Valentyna Sinichenko

    (National Bank of Ukraine)

  • Barry Topf

    (International Monetary Fund)

Abstract

This article overviews the background for financial dollarization in Ukraine. We apply quantitative techniques including both minimum variance portfolio and peer comparison taking into consideration country-specific characteristics to derive an estimated natural dollarization level for Ukraine. The study also discusses potential ways for Ukraine to converge to its natural level, which we estimate at 20%. Additional factors indicate dollarization in the range of 20-30% as realistic medium-term policy goal.

Suggested Citation

  • Kostiantyn Khvedchuk & Valentyna Sinichenko & Barry Topf, 2019. "Estimating a Natural Level of Financial Dollarization in Ukraine," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 247, pages 38-44.
    • Handle: RePEc:ukb:journl:y:2019:i:247:p:38-44
    DOI: 10.26531/vnbu2019.247.03
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    File URL: https://journal.bank.gov.ua/en/article/2019/247/03
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    References listed on IDEAS

    as
    1. Husnu C. Dalgic, 2018. "Financial Dollarization in Emerging Markets: An Insurance Arrangement," CRC TR 224 Discussion Paper Series crctr224_2018_051, University of Bonn and University of Mannheim, Germany.
    2. Guido della Valle & Vasilika Kota & Mr. Romain M Veyrune & Ezequiel Cabezon & Shaoyu Guo, 2018. "Euroization Drivers and Effective Policy Response: An Application to the case of Albania," IMF Working Papers 2018/021, International Monetary Fund.
    3. Ize, Alain & Yeyati, Eduardo Levy, 2003. "Financial dollarization," Journal of International Economics, Elsevier, vol. 59(2), pages 323-347, March.
    4. Honig, Adam, 2009. "Dollarization, exchange rate regimes and government quality," Journal of International Money and Finance, Elsevier, vol. 28(2), pages 198-214, March.
    5. Eduardo Levy Yeyati, 2006. "Financial dollarization: evaluating the consequences [‘A simple model of monetary policy and currency crises’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 21(45), pages 62-118.
    6. Nicolo, Gianni De & Honohan, Patrick & Ize, Alain, 2005. "Dollarization of bank deposits: Causes and consequences," Journal of Banking & Finance, Elsevier, vol. 29(7), pages 1697-1727, July.
    7. Husnu C. Dalgic, 2018. "Financial Dollarization in Emerging Markets: An Insurance Arrangement," CRC TR 224 Discussion Paper Series crctr224_051_2018, University of Bonn and University of Mannheim, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    financial dollarization; natural dollarization; euroization; minimum variance portfolio;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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