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Persistence of Euroisation in Croatia

Author

Listed:
  • Mirna Dumičić

    (Croatian National Bank)

  • Igor Ljubaj

    (Croatian National Bank)

  • Ana Martinis

    (Croatian National Bank)

Abstract

This paper analyses the evolution of financial euroisation in Croatia and examines the use of monetary and macroprudential measures amid the context of high euroisation. Croatia's experience suggests that high euroisation is difficult to diminish despite the country's long history of macroeconomic and exchange rate stability and credible monetary policy, which included regulatory measures for discouraging banking business in foreign currencies. The exit strategy for the elimination of currency risk arising from high euroisation, which complicates monetary policy implementation and maintenance of financial stability, may lie either in euro adoption or in the promotion of the use of the domestic currency. Both options ultimately require the fulfilment of the same preconditions – sound economic fundamentals, a credible economic policy and reduced macroeconomic imbalances.

Suggested Citation

  • Mirna Dumičić & Igor Ljubaj & Ana Martinis, 2018. "Persistence of Euroisation in Croatia," Surveys 31, The Croatian National Bank, Croatia.
    • Handle: RePEc:hnb:survey:31
    as

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    File URL: http://www.hnb.hr/repec/hnb/wpaper/pdf/s-031.pdf
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    Citations

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    Cited by:

    1. Maja Bukovšak & Gorana Lukinić Čardić & Nina Pavić, 2020. "Structure of capital flows and exchange rate: the case of Croatia," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(1), pages 113-146, February.
    2. Mislav Brkic, 2021. "Costs and benefits of government borrowing in foreign currency: is it a major source of risk for EU member states outside the Euro?," Public Sector Economics, Institute of Public Finance, vol. 45(1), pages 63-91.
    3. Deskar-Škrbić, Milan & Kotarac, Karlo & Kunovac, Davor, 2020. "The third round of euro area enlargement: Are the candidates ready?," Journal of International Money and Finance, Elsevier, vol. 107(C).
    4. Mance, Davor & Olgic Drazenovic, Bojana & Suljic Nikolaj, Stella, 2019. "Croatian Kuna: Money, Or Just A Currency? Evidence From The Interbank Market," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 10(2), pages 149-161.

    More about this item

    Keywords

    euroisation; CNB; monetary policy; macroprudential measures;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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