Review of the Bank of Russia and NES Seminar ‘Financial Dollarisation: Causes and Consequences’

Konstantin Egorov,Alexey Ponomarenko

doi:10.31477/rjmf.202102.96

Abstract

At the end of February 2021, the Bank of Russia and NES held an online international academic seminar ‘Financial Dollarisation: Causes and Consequences’. The seminar addressed a number of aspects of dollarisation, such as the non-linear nature of the relationship between the dynamics of the exchange rate and the demand for foreign currency assets, the existence of the hysteresis effect and efficient distribution of risks associated with the loan dollarisation. In this overview, we will provide a summary of the reports presented at the seminar.

Highlights

The phenomenon of financial dollarisation has long been a pressing problem for emerging market economies, including Russia
The reasons for financial dollarisation and the further evolution of this phenomenon were the subjects of discussion at a joint seminar held by the Bank of Russia and NES in February 2021
It is interesting that changes in the dollarisation of household deposits after 2014 have become unrelated to the observed exchange rate dynamics

Summary

Introduction

The phenomenon of financial dollarisation has long been a pressing problem for emerging market economies, including Russia. This may be attributed to objective historical factors, such as the experience of financial crises and episodes of high inflation. The persisting interest in this subject can be explained by the long-term adverse consequences of dollarisation for the efficiency of monetary policy and the risks to financial stability. The reasons for financial dollarisation and the further evolution of this phenomenon were the subjects of discussion at a joint seminar held by the Bank of Russia and NES in February 2021. Four reports were presented at the seminar; they addressed various aspects of dollarisation in Argentina, Armenia, and Russia. 2 Egorov, Ponomarenko: Review of the Seminar ‘Financial Dollarisation’, pp. Vol 80 no. 2 Egorov, Ponomarenko: Review of the Seminar ‘Financial Dollarisation’, pp. 96–104 97

Dollarisation of deposits in emerging markets

The behavioural model of deposit dollarisation

Dollarisation of Russian corporate loans

Dollarisation and the concept of uncertainty

Findings

Seminar results