Event start date: 29.10.2020 14:00

On 29 October 2020, the National Bank of Ukraine hosted an open research seminar, during which Georgios Georgiadis (European Central bank) presented the research paper "Foreign-currency exposures and the financial channel of exchange rates". Foreign-currency exposures on an economy’s external balance sheet may jeopardise financial stability when the exchange rate depreciates. The author explores whether there is evidence of "fear-of-floating" in small open economies facing trade-off between financial stability and macroeconomic stabilization. Findings suggest that this fear-of-floating is particularly pronounced in the presence of foreign-currency exposures. Firstly, fear-of-floating is stronger when the foreign-currency exposures arise through debt instruments. Secondly, the evidence for fear-of-floating is stronger when large open economy monetary policy is tightened, suggesting that fear-of-floating typically arises in the face of immediate threats to financial stability due to depreciation pressures in the presence of foreign-currency exposures.

Materials from the seminar are available via the links below.