IDEAS home Printed from https://ideas.repec.org/a/onb/oenbfi/y2007i1b2.html
   My bibliography  Save this article

Are Euro Cash Holdings in Central and Eastern Europe Driven by Experience or Anticipation? Results from an OeNB Survey

Author

Abstract

Although euroization is an important phenomenon in emerging markets, still very little is known about who holds how much euro and for what purposes. In this paper, we employ unique survey data to analyze various aspects of foreign currency holdings in five Central and Eastern European countries (CEECs). This allows us to study the impact of expectations and hysteresis on individual behavior. Our results show that a substantial share of the population in the countries under review holds euro cash. We find little evidence that inflation or exchange rate expectations are important determinants of euroization, whereas variables related to a country’s economic history seem to be of some significance. Our results also indicate that the demand for euro and its use in domestic payments increases as the date of euro adoption approaches.

Suggested Citation

  • Doris Ritzberger-Grünwald & Helmut Stix, 2007. "Are Euro Cash Holdings in Central and Eastern Europe Driven by Experience or Anticipation? Results from an OeNB Survey," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 77-100.
    • Handle: RePEc:onb:oenbfi:y:2007:i:1:b:2
    as

    Download full text from publisher

    File URL: https://www.oenb.at/dam/jcr:b56b9c6b-ec08-4d46-ad8c-39fefc50b343/feei_2007_1_ritzberger_stix_tcm16-58437.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fischer, Björn & Köhler-Ulbrich, Petra & Seitz, Franz, 2004. "The demand for euro area currencies: past, present and future," Working Paper Series 330, European Central Bank.
    2. Edgar L Feige, 2003. "Dynamics of Currency Substitution, Asset Substitution and De facto Dollarisation and Euroisation in Transition Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 45(3), pages 358-383, September.
    3. Helmut Stix, 2004. "Foreign Currency Demand since 2002 - Evidence from Five Central and Eastern European Countries," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(04), pages 19-24, December.
    4. Helmut Stix, 2002. "The Euro in Central and Eastern Europe (CEE countries) : survey evidence from five countries," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(03), pages 33-38, April.
    5. Bénédicte Vidaillet & V. d'Estaintot & P. Abécassis, 2005. "Introduction," Post-Print hal-00287137, HAL.
    6. Feige,E.L., 2003. "The dynamics of currency substitution, asset substitution and de facto dollarization and euroization in transition countries," Working papers 3, Wisconsin Madison - Social Systems.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Isakova, Asel, 2010. "Currency substitution in the economies of Central Asia : how much does it cost?," BOFIT Discussion Papers 14/2010, Bank of Finland, Institute for Economies in Transition.
    2. repec:onb:oenbwp:y::i:159:b:1 is not listed on IDEAS
    3. Thomas Scheiber & Helmut Stix, 2009. "Euroization in Central, Eastern and Southeastern Europe – New Evidence On Its Extent and Some Evidence On Its Causes," Working Papers 159, Oesterreichische Nationalbank (Austrian Central Bank).
    4. repec:zbw:bofitp:2010_014 is not listed on IDEAS
    5. Thomas Scheiber & Julia Wörz, 2018. "How are reduced interest rate differentials affecting euroization in Southeastern Europe? Evidence from the OeNB Euro Survey," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-18, pages 48-60.
    6. Doris Ritzberger-Grünwald & Thomas Scheiber, 2012. "Euro Cash in Central, Eastern and Southeastern Europe," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 41-55.
    7. Helmut Stix, 2008. "Euroization: What Factors drive its Persistence?," Working Papers 140, Oesterreichische Nationalbank (Austrian Central Bank).
    8. Isakova, Asel, 2010. "Currency substitution in the economies of Central Asia: how much does it cost?," BOFIT Discussion Papers 14/2010, Bank of Finland Institute for Emerging Economies (BOFIT).
    9. repec:onb:oenbwp:y:2008:i:1:b:1 is not listed on IDEAS
    10. Marc Bittner & Thomas Scheiber, 2022. "The use of euro cash as a store of value in CESEE," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-Q2/22, pages 121-143.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Doris Ritzberger-Grünwald & Thomas Scheiber, 2012. "Euro Cash in Central, Eastern and Southeastern Europe," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 41-55.
    2. repec:onb:oenbwp:y:2008:i:1:b:1 is not listed on IDEAS
    3. Bartzsch, Nikolaus & Rösl, Gerhard & Seitz, Franz, 2013. "Currency movements within and outside a currency union: The case of Germany and the euro area," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 393-401.
    4. repec:onb:oenbfi:y:2011:i:4:b:4 is not listed on IDEAS
    5. Quintano, Claudio & Mazzocchi, Paolo, 2013. "The shadow economy beyond European public governance," Economic Systems, Elsevier, vol. 37(4), pages 650-670.
    6. Martin Brown & Helmut Stix, 2015. "The euroization of bank deposits in Eastern Europe," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 30(81), pages 95-139.
    7. Asel Isakova, 2010. "Currency Substitution in the Economies of Central Asia: How Much Does it Cost?," Chapters, in: Ewald Nowotny & Peter Mooslechner & Doris Ritzberger-Grünwald (ed.), The Euro and Economic Stability, chapter 9, Edward Elgar Publishing.
    8. repec:zbw:bofitp:2003_013 is not listed on IDEAS
    9. Rösl, Gerhard & Seitz, Franz, 2024. "Uncertainty, politics, and crises: The case for cash," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(3).
    10. Helmut Stix, 2008. "Euroization: What Factors drive its Persistence?," Working Papers 140, Oesterreichische Nationalbank (Austrian Central Bank).
    11. Mathilde Maurel, 2004. "Financial Integration, Exchange Rate Regimes in CEECs, and joining the EMU : Just Do It," Working Papers hal-01065481, HAL.
    12. Ongena, Steven & Schindele, Ibolya & Vonnák, Dzsamila, 2021. "In lands of foreign currency credit, bank lending channels run through?," Journal of International Economics, Elsevier, vol. 129(C).
    13. Anna Krupkina & Alexey Ponomarenko, 2017. "Deposit dollarization in emerging markets: modelling the hysteresis effect," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(4), pages 794-805, October.
    14. Smirnova, Natalia, 2003. "Job search behavior of unemployed in Russia," BOFIT Discussion Papers 13/2003, Bank of Finland Institute for Emerging Economies (BOFIT).
    15. Feige, Edgar L. & Urban, Ivica, 2008. "Measuring underground (unobserved, non-observed, unrecorded) economies in transition countries: Can we trust GDP?," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 287-306, June.
    16. Seater, John J., 2008. "The Demand for Currency Substitution," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 2, pages 1-30.
    17. repec:zbw:bofitp:urn:nbn:fi:bof-201511231446 is not listed on IDEAS
    18. Feige, Edgar L., 2015. "Reflections on the meaning and measurement of Unobserved Economies: What do we really know about the “Shadow Economy”?," MPRA Paper 68466, University Library of Munich, Germany.
    19. Yinusa, Dauda Olalekan, 2008. "Between dollarization and exchange rate volatility: Nigeria's portfolio diversification option," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 811-826.
    20. Helmut Stix, 2010. "The Euro as a Safe Haven Asset in Central, Eastern and South-Eastern Europe," Chapters, in: Ewald Nowotny & Peter Mooslechner & Doris Ritzberger-Grünwald (ed.), The Euro and Economic Stability, chapter 10, Edward Elgar Publishing.
    21. Benjamin Lester & Andrew Postlewaite & Randall Wright, 2008. "Information, Liquidity and Asset Prices," PIER Working Paper Archive 08-039, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    22. repec:onb:oenbwp:y::i:159:b:1 is not listed on IDEAS
    23. repec:bof:bofitp:urn:nbn:fi:bof-201511231446 is not listed on IDEAS
    24. repec:zbw:bofitp:2010_014 is not listed on IDEAS
    25. Thomas Scheiber & Caroline Stern, 2016. "Currency substitution in CESEE: why do households prefer euro payments?," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 73-98.
    26. Ramis Khabibullin & Alexey Ponomarenko, 2022. "An empirical behavioral model of household’s deposit dollarization," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(3), pages 827-847, July.
    27. Tigran Poghosyan & Evžen KoÄenda & Petr ZemÄik, 2008. "Modeling Foreign Exchange Risk Premium in Armenia," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 44(1), pages 41-61, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:onb:oenbfi:y:2007:i:1:b:2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elisabeth Beckmann (email available below). General contact details of provider: https://edirc.repec.org/data/oenbbat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.