Analyzing Balance Sheet Vulnerabilities in a Dollarized Economy: The Case of Georgia
IMF Working Papers, July 1, 2006
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- Analyzing Balance Sheet Vulnerabilities in a Dollarized Economy: The Case of Georgia
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Bibliographic details
- Authors: Andreas Billmeier, Johan Mathisen
- Published: July 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451864335.001
Summary and purpose
- 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.
Key findings
- The still-high level of dollarization continues to create financial vulnerabilities.
- The overall level of currency mismatch has fallen over the review period (last five years).
- Liquidity problems are unlikely, in part owing to a strengthening of sectoral buffers, hedges, and insurance against shocks.
Policy recommendations
- Accumulating reserves.
- Strengthening securities markets.
- Enhancing banking supervision.
- Maintaining a flexible exchange rate.
Subject coverage and keywords
- 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