Dollarization in Armenia: Structural Causes and Evolution of Monetary Policy

Vsevolod Y. Cherkasov () and Julia A. Maklakova ()
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Vsevolod Y. Cherkasov: Financial Research Institute, Moscow 127006, Russia
Julia A. Maklakova: Financial Research Institute, Moscow 127006, Russia

Finansovyj žhurnal — Financial Journal, 2018, issue 4, 62-75

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.

Keywords: Armenia; dollarization; structural causes; central bank; exchange rate; monetary policy; tools; minimum reserve requirements (search for similar items in EconPapers)
JEL-codes: E52 F31 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:fru:finjrn:180406:p:62-75

DOI: 10.31107/2075-1990-2018-4-62-75

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