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Dollarization in Armenia: Structural Causes and Evolution of Monetary Policy

Author

Listed:
  • Vsevolod Y. Cherkasov

    (Financial Research Institute, Moscow 127006, Russia)

  • Julia A. Maklakova

    (Financial Research Institute, Moscow 127006, Russia)

Abstract

The article considers financial dollarization as one of the distinctive features of the Armenian economy. During the time of currency sovereignty, the country systematically pursued a policy of dedollarization. Various traditionally recommended tools have been applied, including legislative measures, stabilization of domestic prices, differentiation of required reserve ratios and deposit guarantees. Nevertheless, the level of dollarization remains high. The article analyzes its structural causes (labor migration, diaspora, persistent trade deficit). The structural policy gap affects the effectiveness of monetary policy in Armenia conducted within inflation targeting framework, which detailed review is also given in the article. The authors assume that targeted measures toward dedollarization should be supported by comprehensive policy of the Armenian economy competitiveness increase as envisaged by the ongoing medium-term program of national development.

Suggested Citation

  • Vsevolod Y. Cherkasov & Julia A. Maklakova, 2018. "Dollarization in Armenia: Structural Causes and Evolution of Monetary Policy," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 4, pages 62-75, August.
    • Handle: RePEc:fru:finjrn:180406:p:62-75
    DOI: 10.31107/2075-1990-2018-4-62-75
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    References listed on IDEAS

    as
    1. Castillo, Paul & Vega, Hugo & Serrano, Enrique & Burga, Carlos, 2016. "De-dollarization of credit in Peru: the role of unconventional monetary policy tools," Working Papers 2016-002, Banco Central de Reserva del Perú.
    2. repec:zbw:bofitp:urn:nbn:fi:bof-201511231446 is not listed on IDEAS
    3. 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.
    4. repec:zbw:bofitp:2015_032 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Armenia; dollarization; structural causes; central bank; exchange rate; monetary policy; tools; minimum reserve requirements;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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