First Session: Negative Euro Area Interest Rates and Financial Stability: A First Look Beyond The Western Balkans and General Trends
Author:
Klodion Shehu
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Language:
English
Keywords:
SEM; interest rate; euro; central bank; rate; bank; interest rate differential; interest rate environment; ECB monetary policy; FX reserve; risk-taking channel; Currencies; Negative interest rates; Financial sector stability; Exchange rates; Central bank policy rate; Global; Europe; Western Europe; Eastern Europe; Baltics; ECB monetary policy implementation framework
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Abstract

Euroization is a common phenomenon in the Central, Eastern, and Southeastern European (CESEE) region. Hence, the global environment of low interest rates and the ensuing lower interest rate differentials between local and foreign currencies also have a notable impact on euroization. In this chapter, we will focus on this important aspect within the broader topic that the conference sketches. We present here empirical evidence from the Oesterreichische Nationalbank (OeNB) Euro Survey2 building on a number of research papers published by OeNB researchers on the topic of euroization in CESEE.

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Cover Negative Euro Area Interest Rates and Spillovers on Western Balkan Central Bank Policies and Instruments
Negative Euro Area Interest Rates and Spillovers on Western Balkan Central Bank Policies and Instruments
Author:
International Monetary Fund
ISBN:
9789928445391
Publication Date:
04 May 2017
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9789928445391.072
Pages:
344
Figure 1.

High and persistent degree of asset euroization in CESEE
Figure 2.

Decline in interest rate spreads between local and euro deposits
Figure 3.

Cash holdings increased between 2012 and 2016
Figure 4.

Mixed impact of deposit substitution across countries
Figure 5.

Recent rebound in borrowing tilted toward foreign currency
Figure 6.

Impact of foreign currency debt relief measures on loan demand
Figure 1:

The de-euroization life cycle
Figure 2.

Empirical euroization benchmark
Figure 3.

Exchange rate appreciation odds
Figure 4.

Euro negative interest rates and de-euroization
Figure 5.

Euroization; Phase 3: portfolio optimization