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Bank of slovenia adjustment policy to surges in capital flows

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  • Žan Oplotnik

Abstract

The article presents an empirically tested assessment of the Bank of Slovenia (BS), national central bank, adjustment policy to surges in capital flows during the last decade. Exchange rate appreciation, undeveloped banking sector, immoderate money market oscillation, unstable economic trends (all phenomena that can also be found in other transition countries) are just some of the detrimental effects that can be provoked by surges in capital flows if the national economy is faced with some fundamental sectoral deficiencies. Empirical results indicated that BS quite successfully mitigated listed effects of excessive foreign currency inflows during the last decade. With the suitable combination of direct and indirect adjustment methods, BS succeeded in preventing, still vulnerable Slovenian economy from a major form of financial crisis and stronger nominal tolar appreciation (this was not the case in some other countries like Hungary, Poland, Czech Republic, Croatia) although there was some real appreciation.

Suggested Citation

  • Žan Oplotnik, 2003. "Bank of slovenia adjustment policy to surges in capital flows," Prague Economic Papers, Prague University of Economics and Business, vol. 2003(3), pages 217-232.
    • Handle: RePEc:prg:jnlpep:v:2003:y:2003:i:3:id:215
    DOI: 10.18267/j.pep.215
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    References listed on IDEAS

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    Cited by:

    1. Peter Mikek, 2004. "Accession to the Monetary Union and Slovenian Monetary Policy Under Exchange Rate Targeting," Prague Economic Papers, Prague University of Economics and Business, vol. 2004(2), pages 176-186.

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    More about this item

    Keywords

    capital flows; central bank policy; exchange rate regime; appreciation; capital controls; problems of transition;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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