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Estimating a Natural Level of Financial Dollarization in Ukraine




Visnyk of the National Bank of Ukraine, 2019, No. 247, pp. 38-44

https://doi.org/10.26531/vnbu2019.247.03

Estimating a Natural Level of Financial Dollarization in Ukraine

Kostiantyn Khvedchuka , Valentyna Sinichenkoa , Barry Topfb

a National Bank of Ukraine, Kyiv, Ukraine
b International Monetary Fund


Abstract

This article overviews the background for financial dollarization in Ukraine. We apply quantitative techniques including both minimum variance portfolio and peer comparison taking into consideration country-specific characteristics to derive an estimated natural dollarization level for Ukraine. The study also discusses potential ways for Ukraine to converge to its natural level, which we estimate at 20%. Additional factors indicate dollarization in the range of 20-30% as realistic medium-term policy goal.


JEL Codes: F41, E58, G11

Keywords: financial dollarization, natural dollarization, euroization, minimum variance portfolio

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Citation: Khvedchuk, K., Sinichenko, V., Topf, B. (2019). Estimating a natural level of financial dollarization in Ukraine. Visnyk of the National Bank of Ukraine, 247, 38-44. https://doi.org/10.26531/vnbu2019.247.03

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