Analyzing Balance Sheet Vulnerabilities in a Dollarized Economy: The Case of Georgia

July 1, 2006

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Format: Chicago

Andreas Billmeier, and Johan Mathisen. Analyzing Balance Sheet Vulnerabilities in a Dollarized Economy: The Case of Georgia, (USA: International Monetary Fund, 2006) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Balance-sheet analysis (BSA) complements traditional flow-oriented macroeconomic analysis by gauging mismatches in aggregate and sectoral balance sheets of an economy. Enabled by recent progress in data availability, this paper applies BSA to Georgia, focusing on currency mismatches. In reviewing developments over the last five years, the paper finds that the still-high level of dollarization continues to create financial vulnerabilities, but that the overall level of currency mismatch has fallen and that liquidity problems are unlikely, in part owing to a strengthening of sectoral buffers, hedges, and insurance against shocks. Policy recommendations include accumulating reserves, strengthening securities markets, enhancing banking supervision, and maintaining a flexible exchange rate.

Subject: Central banks, Commercial banks, Currencies, Currency mismatches, External debt, Financial institutions, Financial sector policy and analysis, International reserves, Money

Keywords: Asia and Pacific, Balance sheet, Balance-sheet analysis, Banking system, BSA, Cash flow, Central bank, Commercial bank, Commercial banks, Currencies, Currency mismatch, Currency mismatches, Foreign currency, Foreign exchange, Foreign exchange exposure, Georgia, International reserves, Liquidity position, Maturity mismatch, One-off foreign-currency receipts, Vulnerabilities, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/173
Stock No:

WPIEA2006173
ISBN:

9781451864335
ISSN:

1018-5941

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