Browsing by Subject "Keski-Aasia"

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  • Herrala, Risto (2018)
    Bank of Finland Bulletin. Blog
    While the Caucasian and Central Asian (CCA) regions host ethnically and culturally diverse populations, and are difficult to traverse due to the challenging geography, the countries have a long history of political and economic integration. Much of the region was ruled by Timur in the 14th to 16th centuries and, after being separated by Persian invasion in Caucasus and Chinese invasion in Central Asia, the Russian invasion in the 1700’s brought the two again under a shared rule. Subsequently, the CCA became part of the Soviet Union, and the national borders of today were to a large extent drawn during that era as the borders of the Soviet national republics.
  • Isakova, Asel (2010)
    BOFIT Discussion Papers 14/2010
    Published: Book chapter (pages 89-108) in Nowotny, E., Mooslechner, P., Ritzberger-Grünwald, D., The euro and economic stability: Focus on Central, Eastern and South-Eastern Europe, Edward Elgar, 2010.
    Underdeveloped financial markets and periods of high inflation have stimulated dollarization and currency substitution in the economies of Central Asia. Some authors argue that the latter can pose serious obstacles for the effective conduct of monetary policy and can affect households welfare.This study uses a model with money-in-the-utility function to estimate the elasticity of substitution between domestic and foreign currencies in three economies of Central Asia - Kazakhstan, the Kyrgyz Republic and Tajikistan. Utility derived from holding money balances is represented by a CES function with money holdings denominated in two currencies. The residents are assumed to diversify their monetary holdings due to instability of the domestic currency. The steady state analysis reveals that though currency substitution decreases governments seigniorage revenue, holding foreign money can be welfare generating if domestic currency depreciates vis-à-vis the currencies in which households foreign balances holdings are denominated. De-dollarization can only be achieved through further macroeconomic stabilization that will bring price and exchange rate stability. Financial sector development will also decrease currency substitution through the provision of reliable financial instruments and the gaining of public confidence.