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

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Abstract

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.

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  • Thomas Scheiber & Julia Wörz, 2024. "Exporting stability to the European neighborhood – the role of deposit euroization in CESEE revisited after 25 years of EMU," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q4/23, pages 61-78.
    • Handle: RePEc:onb:oenbmp:y:2024:i:q4/23:b:3
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    1. 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.
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    4. Ulrike Malmendier & Stefan Nagel, 2016. "Learning from Inflation Experiences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(1), pages 53-87.
    5. Prean, Nora & Stix, Helmut, 2011. "The effect of raising deposit insurance coverage in times of financial crisis – Evidence from Croatian microdata," Economic Systems, Elsevier, vol. 35(4), pages 496-511.
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    More about this item

    Keywords

    deposit euroization; household savings; survey data; CESEE;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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