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Spontaneous Euroization in the Czech Republic (is it a problem and why not?)


  • Martina Horníková
  • Jaromír Hurník
  • Viktor Kotlán


The paper offers a preliminary analysis of possible spontaneous euroization in the Czech economy. After a brief general introduction of the issue of currency substitution it specifically discusses two things. First, the transmission channels of potential spontaneous euroization, through which the process could possibly complicate the implementation of domestic monetary policy. Second, it analyses the degree of euroization. Among the transmission channels, attention is paid to interest rate and exchange rate channels. The circumstances under which the transmission would be sub-optimal are discussed. Besides the impact on the monetary policy transmission, another risk of progressive spontaneous euroization is seen in the shift of the exchange rate risk from bigger to smaller enterprises in the economy. The available data do not allow a precise measurement of the degree of euroization. Nevertheless, both the ratio of euro-denominated over koruna-denominated deposits and the CNB's survey in 2003 suggest that euroization is not an obstacle for the Czech monetary policy at the moment.

Suggested Citation

  • Martina Horníková & Jaromír Hurník & Viktor Kotlán, 2005. "Spontaneous Euroization in the Czech Republic (is it a problem and why not?)," Prague Economic Papers, University of Economics, Prague, vol. 2005(2), pages 99-108.
  • Handle: RePEc:prg:jnlpep:v:2005:y:2005:i:2:id:255:p:99-108

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    References listed on IDEAS

    1. Meade, Ellen E. & Müller-Plantenberg, Nikolas & Pisani, Massimiliano, 2002. "Exchange rate arrangements in EU accession countries: what are the options?," LSE Research Online Documents on Economics 28754, London School of Economics and Political Science, LSE Library.
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    More about this item


    monetary policy; euroization; dollarization; transmission mechanism; currency; currency substitution;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F15 - International Economics - - Trade - - - Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission


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